Investors are getting a little nervous about the prospects for
Apple (ticker: AAPL) generates more than half of its revenue from smartphones, not even counting the billions of dollars generated by the App Store and the growing set of iPhone-based services. And right now, there are concerns that the combination of Covid-related manufacturing shutdowns in China, component shortages, and signs of a weakening in the consumer economy are putting Street’s current expectations for the iPhone at risk.
Apple shares were left out of Wednesday’s modest rally in technology stocks. They are one of the few large-cap tech stocks trading in the red. Apple closed 0.1% higher at 140.52, while the
rose 1.5%. The stock is down 21% so far this year.
One reason for Wednesday’s weak performance is a story from Nikkei Asia that says Apple’s development schedule for the iPhone 14, expected to arrive this fall, was hampered by lockdowns in Shanghai related to politics. of zero covid from China. In reporting its March quarter results, Apple warned that revenue in the June quarter could be hit by between $4 billion and $8 billion due to supply-related issues from Shanghai.
The Nikkei article, which cites “multiple sources with direct knowledge of the matter,” says that the worst case scenario could be manufacturing delays for the new phones.
Apple has an ongoing policy of not discussing unannounced products and production plans. He did not immediately respond to a request for comment.
Meanwhile, Loop Capital analyst Ananda Baruah believes Apple could scale back its iPhone production plans this weekend. In a research note, he said Wall Street estimates for iPhone sales in the June quarter could be too high at between 4 million and 6 million units and that he believes estimates of the number sold in the March quarter exceeded the estimate. actual figure at 5 million. .
Apple doesn’t disclose iPhone unit sales, so there’s no way to know the actual number.
Baruah believes iPhone revenue for the June quarter could be at risk, but also said consensus expectations for the September and December quarters could be too low. That’s a reflection of his view that Street is understating average iPhone selling prices as consumers opt for higher-end models with more memory capacity over cheaper models.
For the June quarter, Baruah expects Apple to sell 41 million units at an average price of $920. Wall Street’s consensus call is for 47 million units at an average price of $834, she wrote.
For all of calendar 2022, he predicted that Apple will sell 229 million phones at an average price of $927, while its peers, on average, see 242 million units at an average price of $852. Baruah’s call points to $212 billion in revenue, above the Wall Street consensus of $206 billion.
Baruah maintained his Buy rating on the stock with a $180 price target.
Email Eric J. Savitz at email@example.com