Morgan Stanley makes Apple a top pick for 2017 on the next iPhone, Trump's tax reform

Regis Duvignau | Reuters

Investors should buy Apple shares on the prospect of higher sales from the new iPhone this year and Donald Trump's economic agenda, according to Morgan Stanley, which reiterated its overweight rating and made the iPhone maker a top pick for this year.

"The market is focusing too much on near-term supply chain noise and not enough on three potential catalysts: 1) iPhone super cycle led by China, 2) cash repatriation, and 3) US tax reform," analyst Katy Huberty wrote in a note to clients Sunday. "Near-term, we see pent-up demand heading into a significant form factor change that is likely to accelerate iPhone unit growth. ... Apple is a top US IT Hardware pick in 2017."

Apple's shares rose to a 52-week high following the report Monday.