Christmas is just a few days away but it’s quite likely Santa will get aboard his sleigh this holiday season missing a few iPhones.
That at least appears to be the opinion of J.P. Morgan’s Samik Chatterjee. After already lowering Apple (AAPL) estimates in early November on account of the Covid-driven disruptions to production at Hon Hai’s assembly facility in Zhengzhou, China, the analyst is at the trimming desk once again.
“While the rapid extension of lead times for the iPhone 14 Pro / Pro Max has slowed down and in fact began to moderate in recent weeks,” says Chatterjee, “it still remains elevated relative to the lead times seen prior to the COVID outbreak in Zhengzhou as we continue to see the supply shortfall continuing through year-end and impacting the typical seasonal uptick in iPhone volumes seen in Dec-Q.”
So, time for another estimate trim, albeit a more moderate one.
The prior cut was for 8 million less iPhone sales in the quarter, but this time Chatterjee’s near-term iPhone volume forecast for F1Q23 (December quarter) is lowered from ~74 million to ~70 million, which factors in a ~2 million cut for both the iPhone 14 Pro Max and 14 Pro volumes.
However, with supply constraints abating in the lower production months and expecting only a “modest impact to demand,” Chatterjee sees the March quarter picking up some of the slack and therefore, the impact to estimates for FY23 overall will be “more modest.”
As such, the iPhone volume outlook for the March quarter is raised from ~61 million to ~63 million and takes into account ~1 million extra iPhone 14 Pro Max and 14 Pros, each, as the analyst anticipates only a “portion of the unfulfilled demand” will be moved forward to the subsequent quarter.
The result of these adjustments is an expectation for iPhone sales of ~235 million in FY23 compared to ~237 million beforehand, which suggests a 5% year-over-year drop for the full fiscal year.
The changes also require a new price target, reduced from $200 to $190, now making room for one-year returns of 43%. Chatterjee’s Overweight (i.e., Buy) rating stays as is. (To watch Chatterjee’s track record, click here)
Elsewhere on Wall Street, with an additional 22 Buys pitted against 4 Holds, the stock claims a Strong Buy consensus rating. Given the average target stands at $179.1, investors are looking at potential returns of 34% in the months ahead. (See Apple stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
