Analyst Katy Huberty is “incrementally more positive” after the latest round of supply chain checks.
From a note to clients that landed on my desktop Wednesday:
Apple product revenue indicators remain positive. We are incrementally more positive on Apple’s March quarter outlook after our round of January/February checks. From a production standpoint, Y/Y revenue growth for Apple’s Taiwanese supply chain companies continues to accelerate from the September 2020 bottom (1), and January marked the 4th consecutive month of above seasonal revenue growth.
This trend aligns with our supply chain research colleagues forecasts for 89M iPhone builds and 31M iPad builds in C1H21, up 14% Y/Y and 50% Y/Y, respectively. And while 89M iPhone builds is slightly behind our 95M C1H21 iPhone shipment forecast, cumulative iPhone builds are in-line with our cumulative iPhone 12 cycle sales through the June quarter.
Lead times for the iPhone 12 models have largely normalized at 1-3 days as of early March, which we believe indicates improving supply of Apple’s newest iPhone models, rather than slowing demand. In China specifically, we continue to see strong demand for the iPhone and estimate iPhone shipments grew over 150% Y/Y in the month of January.
This is corroborated by the latest smartphone installed base data from China, which shows Apple gained over 70bps of share in the month, the strongest share gains in nearly 1.5 years. Finally, and perhaps most encouraging as we think about momentum carrying into the rest of 2020, Apple’s network of 510 retail stores is nearly fully open; only 14 stores – located in France and Brazil – are closed as of early March and all US stores are now re-opened.
Maintains Overweight rating and $164 target.
My take: I asked Morgan Stanley if Ms. Huberty would be available for a Zoom call this month. “We decline at this time,” was the response.