Take Advantage of Pullback and Buy Apple (AAPL) Stock - Analyst

September 29, 2022 5:41 AM EDT
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Price: $144.44 +1.25%

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    46 Buy, 17 Hold, 5 Sell

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KeyBanc analyst Brandon Nispel has reflected on the Bloomberg report that Apple (NASDAQ: AAPL) is giving up on its plans to ramp up iPhone 14 production “as demand falters.”

While Nispel acknowledges the short-term negative impact of this news on Apple stock, he believes the pullback offers an attractive buying opportunity. The analyst thinks the reporting will have no effect on consensus expectations.

“Our proprietary KFL data suggests Hardware revenue for AAPL continues to be strong. We have also seen data that shows, despite some weakness in smartphone shipments in China, AAPL market share continues to be strong and is likely improving,” Nispel told clients in a note.

Instead of focusing on selling more units, Apple is likely to be keen on taking advantage of the iPhone mix shifting to higher-end models. This should help the Cupertino-based titan to produce above-consensus average selling prices (ASPs), Nispel added.

“By no means is it surprising to us, or should be to investors, that iPhone 14 unit productions may get cut as wait times for the iPhone 14 have been effectively zero, as opposed to a couple week wait time for iPhone 14 Pro/Max. The iPhone 14 just did not receive the same level of upgrades vs. the iPhone 13 as the iPhone 14 Pro/Max received vs. the iPhone 13 Pro/Max,” the analyst further noted.

Similarly, UBS analyst David Vogt indicated that iPhone 14 wait times indicate “solid demand” despite Apple experiencing macro headwinds in Europe and China.

“While availability in key markets like the US and China eased roughly 3 days across the portfolio relative to last week, wait times remain elevated compared to the year-ago period for the Pro Max, a positive sign for demand and ASPs in our view,” Vogt wrote in a research note.

Reflecting on the Bloomberg report, Vogt notes that supply checks indicated that Apple is looking to ship about 92 million units for the iPhone 14 in the second half of the year.

“Our analysis of iPhone availability data along with sell-through data and channel checks supports our 48M unit forecast for the Sept quarter compared to the street at ~51M. In addition, favorable mix towards the Pro and Pro Max is also consistent with our ASP forecast. As such, our $41.8B iPhone revenue forecast (street $42.2B) remains unchanged despite recent market concerns.”

Apple shares are down over 1.3% in pre-open Thursday.

By Senad Karaahmetovic

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