From Emily Bary's "Apple faces risk of ‘perishable demand’ for iPhones, analysts say" posted Monday by MarketWatch:
“We see perishable demand stemming from the Zhengzhou Foxconn plant disruption, instead of an outright production deferral” to the March quarter, Barclays analyst Tim Long wrote in a note to clients Sunday.
His industry conversations indicate that utilization at the Zhengzhou plant is now up to 30%, from 20% at the end of November, but his “base case is that utilization won’t return to normal until sometime [in] late January, at the earliest.”
Long rates the stock at equal weight with a $144 price target.
Oppenheimer analyst Martin Yang has an outperform rating on Apple’s stock, but he lowered his price target to $170 from $190 on concerns related to the production constraints. The price-target cut comes in conjunction with a reduction in his fiscal 2023 estimates that stems, he said, from “later-than-expected iPhone production capacity recovery in China.”
Barclays maintains Equal Weight rating and $144 target (it was $166 last I heard).
Oppenheimer maintains Outperform rating and cuts target to $170 from $190.
My take: These are not the only nervous sell-side analysts ("nervous sellies"?) we'll hear from before the quarter is out.
There is an interesting article on 9 to 5 Mac which shows how Iphone sales are apportioned between Apple Stores, carrier stores and electronics stores in the US. Surprising to some the carrier stores lead in volume. This should make sense as there are many more outlets for sales by carrier than by Apple Stores. And often there are better deals from the Carriers. These deals aren’t based on how long the lead time is on the phone delivery so demand may be more related to that than when the phone actually arrives.
In summary, Oppenheimer & Barclays’ analysts seem to be overreacting. Additionally, with production ramping up I only can assume logically that the three week period will truncate.
30% of total manufacturing capacity? Sounds good, for just one customer.
30% of what Apple is requesting?
Not ideal.
30% of “what we were expecting“?
Completely useless.
Pffffff.
By the way, did anyone hear Cramer saying AAPL needed to go to $120?
(AAPL), Microsoft
(MSFT), Alphabet
(GOOGL) and Amazon
(AMZN). There is simply too much money in these names to take us higher, or at least how high we can go after the Federal Reserve’s next meeting this week. But I think some of that investor money will be transferred into the stocks of companies that have the most voracious buybacks. Those are the companies without enough stock available to handle all the money that will flood in.
Money in those four stocks will be pulled out, kicking and screaming, until the valuations become earthly — better than Meta Platforms
(META) and more like the S&P
as they are revealed to be mortal. Not until then can the rally start in earnest. Can these valuations be played out? It’s happening as you read this.
Of course, there’s one other enemy to the advance and it’s a powerful one: The 4.5% yield from 2-year Treasurys is outrageously bountiful in a market where anything north of 4% in equities is likely tied to plummeting oil. However, we cling to the oils, betting that they can maintain their well above market prices when Russia can’t produce its endless reserves and China goes voracious upon reopening. I think we will win.
Bottom line
We will hold Apple, Microsoft, Alphabet and Amazon, even as we’ve trimmed them higher. Their spiral down to earth, however, will be painful. If we hadn’t sold some, it would be getting late in the game. But I suspect there’s more pain to come. Why take it? Because these companies still have value, even though it won’t surface until the selling’s done and we don’t know when that will occur. It’s too dangerous now to depart, although Apple could see $120 and Microsoft a 10-point decline. Amazon and Alphabet control their own destinies through headcount reductions.
The good news? The selling could end after the Fed meeting. The bad news: If it does, there will not be enough rocket fuel. The big four need to shed a trillion minimum to power things higher. I think it will happen in time. Which would mean a brutal week until the transfer begins to be made. Hold on to what you have, but get ready to be lifted by the stocks with the strongest buybacks. That’s where the accumulation will matter the most.
Otherwise, the real question is where is all the mutual fund, passive Index fund, and managed fund cash that was pulled out over the last 6-8 months since the war/Inflation and rate hikes began? Certainly there were major losses all year by most active funds.
As for: “We see perishable demand stemming from the Zhengzhou Foxconn plant disruption..” What company and product are stepping into that void and taking those sales away from Apple? Does this dolt truly believe that some teenager anywhere on planet earth is going to want anything other than an iPhone? They won’t wait another week or two. Or three?
This is all hysteria on steroids. It’s also as silly as saying since Nike can’t get their orders for “Air Jordans” out of some plant probably also in China, that now everyone is going to be wearing “Buster Brown’s” and “Hush Puppies” because those “Air Jordan” orders are now perishable!
At least try to write something that has a modicum of truth to it as opposed to fear mongering that is totally asinine.
For my money, you get the “quote of the day” award:
“What company and product are stepping into that void and taking those sales away from Apple?”