According to Wedbush Securities Managing Director Daniel Ives, demand for Apple products is “trending better than management’s guidance thus far in the quarter,” despite Apple projecting a $4-8 billion USD drop in quarterly revenue due to lockdowns in China — reports Seeking Alpha.
The Chinese government has been imposing strict lockdowns in several cities since March to combat the country’s largest COVID-19 outbreak in two years. Apple suppliers based in China — including leading iPhone maker Foxconn — have faced factory closures as a result, endangering the supply of both iPhones and other Apple products.
However, Ives said Apple’s iPhone supply chain has been “surprisingly resilient” throughout the entire scenario.
“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. The Wedbush analyst added that the initial production targets for Apple’s next lineup of iPhones “should be up modestly” compared to last year’s iPhone 13.
Ives currently has a price target of $200 per share for Apple, coupled with an Outperform rating on the stock.
Analysts at Piper Sandler said back in March that COVID-19 lockdowns in China would have a “limited impact” on Apple’s performance. That said, Foxconn has warned of slowing demand for consumer electronics in the China region.
Apple has gained approximately 3% market share in the Chinese market over the past 12 months.
Ives noted that the Cupertino, California-based tech giant is uniquely poised to capitalize on the launch of the next iPhone, given that an estimated 240 million active iPhones have not been upgraded in the past 3.5 years and their owners could be persuaded to move up to the next generation.
The Wedbush analyst was also bullish on Apple’s services segment, which he believes is worth more than $1 trillion on its own.
Ives and the rest of Wall Street see a yellow brick road ahead for Apple, especially with the company nearing the introduction of an entirely new product line with the launch of its first mixed-reality headset.