The iPhone’s main promoting season is right here however J.P. Morgan’s Samik Chatterjee thinks there are “potential dangers on the horizon” for Apple’s (AAPL) flagship product and newest mannequin – the iPhone 13.
As it’s 2021, these dangers naturally contain provide chain headwinds. Disruptions are a chance on account of a resurgence of COVID-19 instances in Vietnam – a significant iPhone manufacturing hub – whereas energy utilization restrictions in China are enjoying their half too.
Nonetheless, whereas Chatterjee warns of “dangers which can be price monitoring,” the analyst believes the “magnitude of these constraints are moderating at the moment, and Apple is effectively positioned for a powerful gross sales quarter in C4Q/F1Q (robust promoting season within the final 45 days of the 12 months).”
The newest iPhone’s manufacturing already suffered a “barely delayed begin” on account of digicam module points. Particularly, there have been provide bottlenecks for elements wanted for the sensor-shift optical picture stabilization. Because the characteristic has been included in all 4 fashions, the manufacturing ramp required was “steeper than anticipated.”
Then Covid-19 reared its ugly head once more, as rising instances and consequent September lockdown measures impacted Sharp’s manufacturing facility in Ho Chi Minh Metropolis, Vietnam – the place digicam modules are manufactured.
With the easing of lockdown restrictions on October 1, and the “flexibility to additionally leverage LG Innotek’s digicam facility in Vietnam, or a secondary facility in South Korea,” Chatterjee expects the manufacturing will “ramp steadily from hereon.”
Nonetheless, there could possibly be penalties to the disruption in what’s normally a powerful quarter. The 5-star analyst estimates potential headwinds may influence manufacturing to the tune of 5-10 million items out of a complete of 143 million the analyst had modeled for 2H21 (of which 85 million are for the iPhone 13). This might “drive muted income seasonality for C4Q/F1Q22.” As such, JPM’s name for a quarter-over-quarter uptick of 55% is under the 60%-80% anticipated in “typical years.”
Even so, the headwinds don’t have an effect on Chatterjee’s Obese (i.e. Purchase) score or $180 worth goal on Apple shares. Buyers are taking a look at upside of 27% from present ranges. (See Apple inventory evaluation)
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Disclaimer: The opinions expressed on this article are solely these of the featured analyst. The content material is meant for use for informational functions solely. It is rather necessary to do your individual evaluation earlier than making any funding.