To The Moon

It's no secret that Apple (NASDAQ:AAPL) stands out above all other tech sector titans for a number of reasons.

For starters, the company easily has one of the most-recognizable brand names and images in not just the tech sector but in all of worldwide business. And even with its share price dropping by 17% this year, Apple (AAPL) still remains the world's most-valuable company, with a market cap of $2.3T.

And, because the iPhone still remains the standard by which all other mobile phones are measured, and is Apple's (AAPL) largest source of revenue, anything related to the disruption of iPhone production is going to get the attention of investors.

However, analyst Erik Woodring, of Morgan Stanley, said that while talk of the iPhone is expected, there are five other questions about Apple (AAPL) that he said are increasing among Apple (AAPL) shareholders, and which are worth considering at the end of the year.

"The company has a long runway for growth in the core business through increased penetration of emerging markets and growing monetization of under-penetrated services offerings," Woodring said. "We believe any stock dislocation on the back of supply related disruptions presents an opportunity to own one of the highest quality tech platforms."

Among the matters Woodring said that is coming up around Apple (AAPL) is when the stock might reach a "near-term floor". Woodring said that based on his current earning and price-to-earnings multiple outlooks for 2023, it wouldn't be surprising to see Apple's (AAPL) shares fall to as low as $120, from its current level of around $144 a share.

However, Woodring stressed that he still has a $235-a-share "bull case" valuation on Apple's (AAPL) stock based on factors such as the company acting more like a "subscription model" due to the increasing sales the company brings in from its services business.

Woodring also said that reports of iPhone production shortfalls will remain "the key near-term debate" going into 2023. However, he said that demand for the new iPhone 14 models "is more resolute than feared" due to the upgrade intentions of current iPhone owners. Woodring added that in past periods of iPhone production issues, the following year has "always seen better-than-expected growth [and] estimate revisions, showing [that] demand has been more sustainable than initially feared."

COVID flareups in China, where Apple (AAPL) partner Foxconn has a massive iPhone-manufacturing plant in Zhengzhou, have added to the topic of Apple (AAPL) diversifying its supply chain in order to be less susceptible to issues in China. As such, Apple (AAPL) has begun to move the some of its Apple Watch, AirPods and older iPhone production to Vietnam and India, and Woodring said, "We wouldn't be surprised to see regions like India, Vietnam and Malaysia as more significant centers of production over the next few years."

With services becoming Apple's (AAPL) second-largest revenue generator after the iPhone, sales of subscriptions to offerings such as Apple Music and iCloud storage are playing a bigger role in the company's overall business strategy. Woodring said that the App Store and licensing will likely be the two areas to drive services in the next few years, and return the segment to double-digit year-over-year sales growth.

Finally, Woodring said that Apple's (AAPL) launching of an augmented or virtual-reality headset presents "an attractive long-term opportunity" for the company, but it will take time to have a major impact on the company's overall results.

"Any product that Apple launches will reflect the quality of the brand and be differentiated by the differentiation of hardware, software and services," Woodring said. "This could grow over time as a content ecosystem is built out to have broader-reaching impacts."

Earlier this months, Apple (AAPL) was reported to have sped up work on its AR/VR headset efforts, and even gave a name to the device's operating system.