Apple (AAPL) December Quarter iPhone Shipments Constrained by Demand, Not Supply - Mizuho

Mizuho Securities analyst Abhey Lamba reiterated a Neutral rating and $125 price target on Apple (NASDAQ: AAPL) after checks in Asia and Japan. The analyst December quarter shipments will likely be constrained by demand not supply of iPhones.

"After analyzing information from a host of supply chain vendors, Mizuho Securities’ technology analyst in Japan, Yasuo Nakane, published a note this morning “iPhone production trends from value chain perspective” indicating there is significant supply of iPhone components in the near-term and quarterly shipments will likely not be constrained by supply challenges," Lamba commented. "Our demand-side checks indicate that while iPhone 6s cycle is moving along well, there seems to sufficient supply to meet the demand. Phones are available in the stores, which is relatively rare for an iPhone cycle at this early in its cycle."

The analyst said while December shipments could post YoY growth, iPhone 6s cycle will likely post YoY decline in units.

"Given the timing of iPhone 6s launch and earlier release of the phone in China, the company is likely to post YoY growth in the December quarter. Based on the component checks, Apple might have produced 52mm iPhones in C3Q15 and is planning to manufacture ~75mm units in C4Q15. The company had likely produced ~20-25m units of iPhone 6s prior to C3Q15, giving it ample supply for the holiday season. We think the company could report ~45-50mm phones for the September quarter (inline with consensus) and base its guidance on ~75-80mm phones (slightly better than consensus and versus 74mm a year ago) for the December quarter. However, based on the supply chain checks reported in the note, Apple could ship fewer iPhones in the iPhone 6s cycle versus a year ago. Our conversations with various iPhone users indicate that upgrade cycles are likely remaining around two years with very few users taking up Apple’s upgrade plan. Our checks indicate possibility of a mid-cycle release of iPhone 6C in spring of 2016 but it remains to be seen how effectively will it be in driving unit volume."

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $110.78 yesterday.

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