Apple’s supply chain issues might not be that bad, Wall Street says

Analysts say Apple’s supply crunch looks to be only temporary, occurring during Apple’s slower time of the year, and the company’s record Q2 earnings reported Thursday shows the resilience of demand.


Emily Bary for MarketWatch:

While Apple topped expectations with its latest quarterly results Thursday, the company warned that it expects supply-chain challenges to cause a $4 billion to $8 billion negative impact in the June quarter, “substantially larger” than what was seen in the March period. Apple now has to deal with the consequences of recent COVID-related factory closures in China on top of the global chip shortage that has dogged it in recent periods.

“The production issues ought to be transitory – and they occur at the best possible time of the year during the weakest seasonal period ahead of fall launches,” wrote Raymond James analyst Chris Caso. “We think that sets September up well assuming China normalizes.”

Citi Research analyst Jim Suva admitted that Apple’s prediction of further supply challenges was “not a positive” though he considered it a ‘good’ problem because demand is materially outpacing supply and Apple’s installed base continues to grow.”

“For those who argue that demand is declining and want to be negative on the stock, we point to the long product lead times, no compelling competitive substitution product, and an Apple installed base that is growing that will lead to future services revenues, which are more profitable than product revenues,” continued Suva, who has a buy rating and $200 target on the shares.

MacDailyNews Take: Apple is very conservative with guidance, so the opportunity for a fiscal Q3 beat of somewhat lowered expectations is certainly possible in late July.

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[Thanks to MacDailyNews Reader “Fred Mertz” for the heads up.]

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