Investors should look beyond Apple ‘s near-term challenges to see strong catalysts on the horizon, according to Morgan Stanley. Analyst Erik Woodring reiterated the stock as his top pick with an overweight rating. He also increased the price target by $5 to $180, which implies an upside of 23.4% from Thursday’s close. “If we look beyond the near-term, we see a catalyst-rich event path over the next 12 months that is underappreciated by investors, including reaccelerating iPhone and Services growth, record gross margins, two new product launches, and the potential introduction of an iPhone subscription program,” he said in a note to clients Friday. Near-term challenges include weakening consumer electronics spending trends, a challenging economic backdrop, headwinds from foreign currencies, iPhone production shortages and remaining Covid restrictions, Woodring said. Those challenges could push Apple to its first year of revenue and per-share earnings declines since 2019. But Woodring said investors should look past what could be a tough short-term, instead focusing on incoming tailwinds. Despite questions over the success of the iPhone 14 series, Woodring said pent-up demand should bring shipment reacceleration to beat expectations by the 2024 fiscal year. That’s taking into account the potential for a conservative replacement cycle if the economy weakens, he said. New iPhones should be down 9% in fiscal 2023 — the biggest year-over-year drop since 2019 — due to supply shortages and sliding demand. Apple’s services business, meanwhile, is expected to return to double-digital revenue growth in the 2023 and 2024 fiscal years, Woodring said. That performance will be driven in part by a re-acceleration in app store popularity, price increases and easing headwinds related to foreign currency. He said those price increases could be seen in products such as Apple Music, Apple TV+, Apple One and international apps. Adjusting foreign exchange headwinds also helps illustrate the likelihood that Apple will beat consensus estimates on its gross margin for the 2023 and 2024 fiscal years, according to Woodring. He said the strength of its gross margins when viewing with foreign exchange challenges in mind is “perhaps what is most underappreciated by investors today.” New products are also known to be positive catalysts — and Woodring said the company’s new headset for alternate and virtual reality and its new iPhone 15 should be no different. He pointed to historical data that shows the stock outperforms the S & P 500 by 20 points, on average, in the six to nine months after a new iPhone is announced. Paired with the headset, he said the two launches could help drive up the share price. The potential for a hardware subscription could unlock a more than $1 trillion market for the company and help push shares closer to Woodring’s bull case of shares reaching $230. A subscription service would both help drive user spending higher and shift the market’s view on the stock’s valuation, he said. (His bull case of $230 being realized would mean the stock would add 57.6% from where it closed Thursday.) Still, there are risks facing the tech giant and its ability to perform, especially in the short term. Woodring said the stock could be hurt by a worse-than-expected rebound in consumer health, if the app store fails to make progress toward increased growth and monetization, or if headwinds such as foreign exchange were underestimated going forward. Apple shares have rallied 12.3% in 2023, through Thursday’s close. The stock rose slightly in the premarket. AAPL YTD mountain AAPL in 2023 — CNBC’s Michael Bloom contributed to this report.