Think the iPhone 6 cycle will play out like the iPhone 5? Morgan Stanley’s chief Apple watcher thinks you’re wrong.
Two years ago, Apple’s share price peaked at about $100 (adjusted for a 7-1 split) before falling below $55 seven months later. In a note to clients issued Tuesday, Katy Huberty offered eight reasons why 2014 won’t play out like 2012:
1. Investor ownership. Even after the run-up in Apple’s share price over the past 12 months, the portfolios of the top 100 institutional owners still only have a 2.3% position in Apple, compared with 4.5% in 2012 when institutional ownership peaked.
2. Cash return. Before 2012, Apple didn’t have a cash return program. In fiscal 2012, it paid $2 billion in dividends with no share repurchases, for a total yield of 0.5%. Today, Apple offers what Huberty characterizes as an 8.5% yield, combining dividends and share purchases that have lowered the number of outstanding shares by 9%.
3. Estimate revisions. The Street’s EPS estimates peaked in October 2012, a month after Apple’s share price peaked. Now sell-side analysts have once again started to revise their estimates upward, a trend Huberty believes will continue as more of them incorporate revenue from iWatch in their models.
4. New hires. Tim Cook started putting his stamp on the company’s executive team in October 2012, when he fired two senior PVs: Scott Forstall and John Browett. Since then he has hired top executives in wearable design, luxury marketing, music streaming, healthcare technologies, and other vertical fields. In the spreadsheet below, Huberty lists 17 high-profile hires in the past 18 months. And those are just the names she’s heard about.
5. R&D investments. Huberty expects R&D growth to hit 60% year over year in fiscal Q4, up from 29% last year and 36% in fiscal Q3. The increase will be even more significant, she says, because it will have been spent developing new devices. In the recent past Apple’s research dollars went into services like Siri, iCloud and Maps — investments that don’t make a lot of money, especially compared with, say, a new iPhone.
6. Mergers and acquisitions. Apple has sharply increased its appetite for acquisitions compared with 2012. In the first three quarters of fiscal 2014, Apple snapped up $898 million worth of new companies, and it just closed its largest acquisition ever, buying Beats for $3 billion.
7. Gross margins. Apple’s profit margins peaked in Fiscal Q2 2012 and declined through 2013. Those margins stabilized this year and Huberty believes that an iWatch will sweeten them.
8. Online services. Huberty estimates that the App Store will account for more than half of Apple’s online services business next quarter, reversing the trends in fiscal 2013 when iTunes growth was decelerating and operating margins were below the corporate average. By Christmas online services should be what Huberty calls “margin accretive.”
According to an SEC form 13f filed Friday, Morgan Stanley purchased more than 2 million shares of Apple between March 1 and June 30, bringing the total value of its Apple holdings to $3.8 billion.
See: The big funds on Apple: Who bought, who sold last quarter
Follow Philip Elmer-DeWitt on Twitter at @philiped. Read his Apple (AAPL) coverage at fortune.com/ped or subscribe via his RSS feed.