Apple’s WWDC keynote could be more of a catalyst for Apple stock than what has historically been seen, largely due to a focus around Apple Silicon, Morgan Stanley says.

In a note to investors seen by AppleInsider, Morgan Stanley analyst Katy Huberty writes that WWDC hasn’t historically been a major driver of Apple stock performance. However, that has changed in recent years.

Over the past 10 years, Apple has underperformed the S&P 500 by a median of 120 basis points and 110 basis points in the first week and second week following a WWDC event. In the month after a developer keynote, it outperformed the S&P 500 by 70 basis points.

However, in the last two years, Apple stock performance post-WWDC has been more pronounced, Huberty writes. Apple outperformed the S&P 500 by 440 basis points in the first week after an event and 600 basis points in the month after.

“While we expect the majority of software/operating system upgrades to be more evolutionary than last year, we do believe Apple will highlight efforts to broaden the use of in-house designed silicon, and potentially launch a new MacBook with the Apple Silicon, making this year’s WWDC a potentially more significant catalyst than years past,” Huberty writes.

The main focus of the event, Huberty adds, will likely be Apple Silicon. The WWDC 21 conference will mark a one-year anniversary of the M1 chip and the analyst expects Apple to continue the momentum in transitioning away from Intel.

Huberty expects Apple to debut some type of upgraded Apple Silicon chip — perhaps an “M2.” With the continued work-from-home and remote learning environment, the analyst predicts that the Mac could become a $68 billion business by 2025. That would be more than double the Mac’s current revenue.

As far as software updates, the analyst expects Apple to unveil iOS 15, the next generation of macOS, and updates to watchOS, iPadOS, and tvOS.

Current rumors suggest that the new slate of OS updates could focus on customization features. The analyst believes Apple could also add some iOS 14 features to iPadOS 15 and launch new privacy settings across its ecosystem.

Huberty maintains her 12-month AAPL price target of $161. It’s based on a sum-of-the-parts analysis by applying a 5.7x enterprise value-to-sales (EV/Sales) multiple on Apple’s product business and an 11.8x EV/Sales multiple on Services. That results in an implied 7x target EV/Sales multiple for 2022 and a 31x price-to-earnings multiple.

Apple’s WWDC 21 keynote kicks off at 10 a.m. Pacific (1 p.m. Eastern) on Monday, June 7.

Follow all the details of WWDC 2021 with the comprehensive AppleInsider coverage of the whole week-long event from June 7 through June 11, including details of all the new launches and updates.

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