If the situation persists into late June, says analyst Timothy Arcuri, Apple might have to postpone the launch of its 5G iPhones.
From a note to clients that landed on my desktop Monday:
As expected, China iPhone sales were down materially as areas in the country were in a lockdown for at least two weeks in the month of February. iPhone shipment declined 61% YoY despite very easy comps (shipment was down 67% YoY last year). On a month/month basis, iPhone sales declined 79%. We estimate iPhone sales are tracking close to 2MM below prior year level for CQ1:20 in China and given broader impact, we cut March estimates again and recently reduced June following UBS Asia team’s supply chain work. Supply challenges have given way to broad global demand concerns; if the situation persists deep into the June, it is possible that AAPL would have to delay the 5G iPhone launch this Fall, though our base case remains that the launch is on-time and we maintain our C21 ests unchanged and see long-term growth…
We lower our valuation multiple to reflect the decline in large cap tech valuation comps.
Maintains Buy rating but cuts price target to $335 from $355.
My take: Near as I can tell, Arcuri is the first major Apple analyst to crack. He had reiterated his $355 target just last week.
See also: The Apple 3.0 COVID-19 archives