Apple‘s (AAPL) iPhone 14 supply continues to be negatively impacted by a Covid-related production slowdown at its main assembly plant in China. AAPL stock wavered on Friday.
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However, Apple is unlikely to lose sales to rival Android smartphones during the production shortfall, Evercore ISI analyst Amit Daryanani said in a note to clients late Thursday. Apple’s loyal customer base will simply wait, and upgrade their handsets when the company has inventory, he said.
On Nov. 6, Apple warned that Covid-19 restrictions at the factory, owned by Taiwan-based Foxconn, had “significantly reduced capacity” for the iPhone 14 Pro and Pro Max models. Those high-end models of the iPhone 14 series remain in high demand, the company said. But sales of the regular iPhone 14 models are disappointing.
“We expect demand to be deferred rather than lost,” Daryanani said. “Assuming the plant operates at about 50% capacity for 7-14 days, this could push out about $3 billion of iPhone revenue from the December quarter to the March quarter.”
AAPL Stock Wavers
In morning trades on the stock market today, AAPL stock alternated between modest gains and losses. In recent trades, it was up 0.2% to 150.97.
Daryanani rates AAPL stock as outperform with a price target of 190.
“Foxconn’s struggles to resume normal operations have resulted in longer lead times for the more in-demand high-end models,” Daryanani said. “Given the consistently strong demand for the iPhone 14 Pro and Pro Max and the stickiness of the Apple ecosystem, we continue to view this as revenue deferred vs. lost.”
Lockdowns Costing Apple $1 Billion A Week
The Covid pandemic disruptions likely are costing Apple $1.05 billion a week in missed sales, Jefferies analyst Kyle McNealy said in a note to clients Wednesday. Each week of Covid lockdowns in China also will cut a penny a share from Apple earnings, he said.
Assuming a three-week lockdown period, McNealy cut his sales estimate for the December quarter by $4.3 billion. He also lowered his earnings-per-share target by 5 cents to $2.09.
McNealy rates AAPL stock as buy with a price target of 195.
Apple stock has an IBD Composite Rating of 81 out of 99, according to IBD Stock Checkup.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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