Morgan Stanley: Apple's iPhone Demand Tracking Above Expectations, Demand In China Surging

Katy Huberty of Morgan Stanley reported on Friday that based on internal surveys and analysis, Apple Inc. (NASDAQ: AAPL) is benefiting from a better-than-expected demand for iPhone devices.

"Our tracker indicates 67 million unit demand for the December quarter, above our estimate of 62 million units and sell-side consensus of about 63 million," Huberty wrote. The analyst adds that demand is also tracking in-line with supply chain build of 65 million to 70 million for the quarter.

According to Huberty, if demand for iPhone devices remains strong during the last two weeks of December, it implies channel inventory fill for the iPhone will have to occur in the March quarter or beyond. The analyst notes that Apple has already said that it will increase iPhone channel inventory from a target range of four to six weeks to five to seven weeks and that the company was below the four to six week range as it entered the December quarter.

Huberty states that year-over-year iPhone growth in the United States is "tracking in-line" to overall global trends, but demand in China is tracking nearly three times global year-over-year growth. The analyst also states that demand in Brazil is tracking "significantly" above global trends while demand in France and Japan are tracking "somewhat below" global growth.

Shares are Overweight rated with a $126 price target.