Analyst sees silver lining in Apple’s iPhone 14 Pro supply issue; maintains $200 price target

In a statement released on Sunday, Apple warned that it expects lower than anticipated shipments of iPhone 14 Pro and iPhone 14 Pro Max than previously anticipated following a significant production cut at its main assembler’s (Foxconn) “iPhone City” plant in China due to the Chinese Communist Party’s quixotic “zero-COVID” lockdowns.

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Brian Sozzi for Yahoo Finance:

If there is any tiny positive from Apple’s fresh iPhone production warning, it’s that recession fears haven’t stopped people from wanting $1,000 plus new models and waiting weeks to get them.

“Supply chain challenges have been frequent the last couple of years, and there is limited evidence that delays in shipping devices have had any impact on overall volumes for a product cycle (example: iPhone 12 or iPhone 13) over a multi-quarter period.” JP Morgan analyst Samik Chatterjee wrote in a note to clients.

Chatterjee explained that “within the hardware portfolio, we see the demand destructions from supply pushouts the least for the iPhone, as consumers are willing to wait for delivery; and would expect the delayed shipments to push out into F2Q23 (March-end) or later quarters.”

“We continue to see strong demand for iPhone 14 Pro and iPhone 14 Pro Max models,” the [Apple’s] statement said. “However, we now expect lower iPhone 14 Pro and iPhone 14 Pro Max shipments than we previously anticipated.”

Chatterjee stayed with an Outperform rating on Apple with a $200 price target but warned there is heightened risk to Wall Street analyst estimates for the current quarter.

MacDailyNews Note: In his note to clients Chatterjee also wrote, “We see upside in several aspects of the business as well as financials that remain underappreciated by investors, namely the transformation of the company to Services, growth in the installed base, technology leadership, and optionality around capital deployment — all of which together lead us to expect double-digit earnings growth and a modest re-rating for the shares.”

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

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