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Barclays analysts reiterated an Equal Weight rating on Apple (NASDAQ:AAPL) stock and a $144 per share price target.
The analysts remain cautious on Apple after Taiwan November supplier revenue came in 19% below seasonal, led by Foxconn (TW:2354) and Pegatron (TW:4938) weakness. This indicator tracks 14 Taiwan-based suppliers who have Apple exposure ranging from an estimated 75% to 10%.
“The below-seasonal November is not too surprising given 1) production issues at Foxconn’s Zhengzhou plant due to Covid disruption and lockdowns; 2) there was strong earlier build pull-in in September, which would likely cause C4Q builds to come in below seasonal. Foxconn also offered weak C4Q guide at its earnings last month and expected C4Q smartphone revenue to decline Y/Y,” the analysts said in a client note.
As a result, the analysts estimate mid-to-single-digit declines year-over-year for iPhone revenue as far as the December quarter is concerned. This compares to the “too high” Street consensus that projects a 2% iPhone revenue decline, they added.
The analysts also see “a bigger impact to EPS due to the less favorable mix at IP14 for Dec-Q.”
“15-20M unit shortfall for Dec-Q is now the base case, in our view, with Foxconn utilization not ramping as fast as expected previously. Recent lackluster sell-through data out of China (we have heard of declines of 20%-50% Y/Y recently), especially with notable IP14 and IP14 Plus demand weakness, also confirms our negative bias in the near term,” they added.
Apple stock price is up about 0.5% in pre-open Monday after closing at $142.16 on Friday.
