Apple iPhone supply chain 'surprisingly resilient' despite China's COVID issues, Ives says
Apple (NASDAQ:AAPL) shares have fallen 20% since March, but investment firm Wedbush Securities noted iPhone supply chain checks have been "surprisingly resilient" despite China's COVID-related lockdowns.
Analyst Dan Ives, who rates Apple (AAPL) shares outperform and has a per-share price target of $200, noted that even though Apple (AAPL) expects revenue to be impacted by $4 billion to $8 billion due to the China lockdowns, demand is holding up and "trending better than management's guidance thus far in the quarter."
"The China issues and supply chain should be peak worry in the June quarter and then subside into the key September/December quarters on the heels of a new iPhone 14 launch," Ives wrote in a note to clients, adding that the initial production plans for the next iPhone "should be up modestly" compared to the iPhone 13.
Apple (AAPL) shares were up more than 1.5% to $139.61 in premarket trading on Friday.
In addition, Ives noted that Apple has gained approximately 3% of market share in China over the past 12 months, thanks to the iPhone 12 with 5G and iPhone 13.
On Thursday, research firm Canalys said Apple (AAPL) had 51% of the North American smartphone market in the first quarter, aided in part by the iPhone 13.
With an estimated 1.8 billion active iOS devices, Ives also noted this is Apple's (AAPL) "unique advantage" over other tech companies and with an estimated 240 million iPhones not having been upgraded over the past 3.5 years, the tech giant has a huge opportunity to get consumers to switch smartphones.
Lastly, the combination of the hardware business and Apple's (AAPL) services business, which Ives believes is worth more than $1 trillion on its own, help make the risk/reward "very compelling" on the stock at current levels.
On Thursday, it was reported that Apple (AAPL) had shown its mixed reality headset to its board of directors, suggesting it is at an "advanced stage" in the device's development.