3 reasons the recent sell-off in Apple creates a 'compelling entry point' ahead of the iPhone 12 launch, according to Morgan Stanley

• Investors should take advantage of the recent sell-off in shares of Apple, as it provides a "compelling entry point" ahead of its iPhone 12 launch, Morgan Stanley said on Friday.
• Shares of Apple have fallen 20% from their September 2 high, outpacing the broader decline as technology stocks led the market lower throughout September.
• Morgan Stanley reiterated its "overweight" rating and $130 price target for Apple, representing potential upside of 20% from Thursday's close.
• Here are three reasons investors should buy the dip in Apple, according to Morgan Stanley.
• Visit Business Insider's homepage for more stories.

Ahead of the much anticipated iPhone 12 launch, investors should take advantage of the recent sell-off in shares of Apple and buy the dip.

That's according to Morgan Stanley's Katy Huberty, who in a note on Friday reiterated Apple's "overweight" rating and $130 price target, representing 20% upside potential from Thursday's close.

Huberty said she thinks strong data points in Apple's business run counter to its recent stock decline of 20%, which outpaced the broader market as technology stocks led it lower from record highs on September 2.

Therefore, shares of Apple present a "compelling entry point" ahead of Apple's next iPhone launch, Huberty said.

Here are three reasons investors should buy the dip in Apple, according to Morgan Stanley:

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1. Store reopenings are accelerating.

"We continue to see the pace of Apple's retail store reopenings accelerating," Huberty said. "While Apple has reopened 57 total US stores in the last 4 weeks, yesterday, September 23rd, Apple reopened a total of 30 retail stores in the US ... This brings Apple's total open retail store count to 446 of 512 stores (87% of all stores)."

2. An Apple supplier reported strong earnings.

Jabil on Friday reported strong earnings that beat analysts' estimates — and Apple represents 22% of Jabil's revenue, according to Morgan Stanley.

Huberty highlighted that during Jabil's earnings call, Chief Financial Officer Michael Dastoor said mobility was a big driver of its revenue upside in the quarter. "The out-of-season launch continues to perform extremely well," Dastoor said. "In tandem with this, the upcoming next-generation launch, which will begin in Q4, is going extremely well."

3. There is strong demand for Apple's Mac and MacBook lineup.

"We continue to see lead times extending for Apple's Mac and Macbook lineup, which we believe points to strong demand, rather than a lack of supply, for Apple's computer products," Huberty said.

She added: "We forecast Mac revenue growth accelerating to 29% Y/Y in the September quarter, which we believe better aligns with the improving Mac data points and easier Y/Y compares."

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