Any concerns Apple (AAPL) was about to feel the impact of supply shortages in its December quarter (F1Q22) report were given short shrift after the company delivered an earnings masterclass.

The tech giant delivered record quarterly revenue on top of beats in both headline metrics and across all segments with the exaction of the iPad.

Morgan Stanley’s Katy Huberty applauds “one of the cleanest quarters in recent memory,” particularly noting the strong growth displayed by the Mac and Services. The analyst says the results “illustrate the strength and stability of Apple's product and services ecosystem, a clear differentiator in a more difficult market environment.”

That is particularly evident when coupled with the “stronger-than-anticipated” March quarter guide, which the company delivered despite the ongoing – albeit easing – supply constraints, and hard-to-match year-over-year comps.

By Huberty’s calculations, the March quarter outlook will lead to revenue growth of around 5% year-over-year. This suggests a sequential growth drop of 24%, which is better than “pre-COVID seasonality” of -31%. “Importantly,” says Huberty, “This also takes into account continued chip shortages, which we see as a potential source of upside in the event supply improves more than expected.”

What this indicates is that despite the continued headwinds, management expects the current quarter’s performance to be “above seasonal strength.”

On top of that, there’s the June quarter’s anticipated launch of the iPhone SE3, which is likely to provide a boost in F3Q quarter as well. As such, Huberty increased her FY22 revenue growth forecast from 6% year-over-year to 8%.

Taking a step back, Huberty believes the results will probably “refocus investors on the longevity and durability of Apple's 1.1 billion, and growing, user base.” Factor in a “robust innovation engine,” for which over the next 3 years, the 5-star analyst anticipates R&D will increase at a 17% CAGR and provide the basis for a “growing pipeline of new products and services.” This all implies there still is plenty of room to grow both hardware and services spend per user.

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Therefore, Apple remains Huberty’s “top pick for 2022” with an Overweight (i.e., Buy) rating and a new price target of $210 (up from $200). The implication for investors? Upside of ~21%. (To watch Huberty’s track record, click here)

In general, the rest of the Street is on the same page. 24 Buy ratings compared to 5 Holds assigned in the last three months give Apple a ‘Strong Buy’ analyst consensus. At the $192.18 average price target, shares could surge ~11% over the next twelve months. (See Apple stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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