“There is still no reason to become materially more cautious on 2021 expectations.” — Analyst Timothy Arcuri
Amid January smartphone sales down ~37% Y/Y, iPhone was still up 5% due to easier comps. On a month/month basis, iPhone demand was down 28%, worse than normal 4yr seasonal of down ~21%. COVID-19 has clearly impacted overall sales in January but AAPL’s negative pre-announcement from last week suggests February numbers are likely to be far worse due to both supply and demand issues related to the virus outbreak – a situation so fluid that AAPL didn’t even provide a new range.
While there will have to be some channel re-stocking, the pace of recovery in June Q is more dependent on the demand side – which is very hard to predict. Even so, investors are generally more focused on the Fall launch and we believe there is still no reason to become materially more cautious on 2021 expectations – the key for the stock at this point.
Maintains Buy rating and $355 price target.
My take: Arcuri’s calm is admirable, but I wonder if this was written before Monday’s bloodletting.
See also: Apple 3.0 COVID-19 archives.