Despite supply chain issues related to COVID-19 and Apple’s warnings of lower iPhone 14 Pro shipments, Wedbush insists that investors should maintain their hold on Apple stock. Since mid-October, Apple has had to deal with problems at its Foxconn plant in Zhengzhou, China, caused by the COVID-19 infection and the ensuing severe restrictions affecting its operations.
Apple also issued a rare market alert on Sunday, acknowledging lower production of the iPhone 14 Pro model.
Wedbush analysts Daniel Ives and John Katsingris offered their own hot take on the matter, warning wavering investors not to sell shares in the midst of temporary adversity.
The Wedbush note noted the “disruption” around factories in China, including workers leaving due to conditions and restrictions, noting that the situation is “an absolutely devastating blow to Apple during its most important holiday quarter.
While demand remains high and firm heading into the holiday season, Wedbush estimates that supply issues could have a negative impact on iPhone sales of just 3 percent.” If Zheng remains at low capacity in the coming weeks, this will result in a significant shortage of iPhone Pro during the all-important Christmas season, especially in the U.S.,” the note explains.
It’s not “the kind of news any bull wants to hear from Apple,” but Wedbush added that while it’s a supply issue and “a very frustrating situation” related to anti-epidemic policies, it’s not a demand-driven issue. Demand is strong, it’s just that events have caused Apple to not be able to keep up with the market as much as it would like.
Wedbush likened the situation to an “albatross” with great stamina, but still provided “a positive narrative of the demand story in this dark economic storm.
Finally, Wedbush continues to maintain its Outperform rating on Apple and maintains its 12-month price target of $200.
