Fast Facts
- KeyBanc Capital Markets said Monday that March iPhone sales were up 9% month-over-month, though they were down 15% year-over-year.
- The dip is representative of the ongoing headwinds Apple is facing in China.
- Wedbush's Dan Ives, however, said that there are plenty of reasons to remain bullish on Apple in the near-term.
This year, shares of Apple (AAPL) — down about 12% for 2024 — have been performing toward the lower end of its group of Magnificent Seven peers.
The stock pressure comes amid a storm of challenges for the iPhone-makers, the most significant of which seems centered around weakening iPhone sales and headwinds from China, which has long been a key market for Apple.
Apple in January was hit with downgrades from Piper Sandler and Barclays, with Piper Sandler analysts writing in a note: "We are concerned about handset inventories ... and also feel that growth rates have peaked for unit sales ... deteriorating macro environment in China could also weigh on handset business."
KeyBanc Capital Markets said Monday that domestic March iPhone sales increased 9% month-over-month, though they were still down 15% year-over-year.
Analysts at KeyBanc lowered their iPhone estimates by 2.2%, saying: "Overall, our data is telling us we should expect below-average growth for F2Q24, when we see potential for a miss/lower during earnings."
In the midst of Apple's struggle to get a better handle on iPhone sales, the company shuttered Project Titan, its electric car project, and was hit with a massive antitrust lawsuit from the U.S. Department of Justice.
As part of its move to kill Project Titan, Apple also recently laid off 600 California employees.
While the news coming out of Apple has been negative lately, Wedbush tech analyst Dan Ives doesn't think there's reason to panic yet.
Related: Key analyst says latest Apple move would be a 'horror show'
The case for a near-term bull
Ives said in a Tuesday note that while Apple is facing a "perfect storm" of challenges, especially in China, where competition from Huawei is heating up, the story might not be as bad as it seems.
Citing a recent trip to Asia, Ives said that Chinese iPhone sales are holding steady with initial projections from the beginning of 2024. While this is "not a positive result per se," Ives said that it is "better than had been feared."
"We believe while China has clearly performed below expectations, other regions including the U.S., Europe and India have been relatively strong in the March quarter and will help balance out a soft China number," he said.
Still, Ives noted that with 20% of iPhone sales coming from China, Apple needs to "turn this headwind into a tailwind" when the iPhone 16 is released in the Fall.
His case for a persistently bullish Apple outlook is based on a few factors, one of which is that he believes current full-year iPhone sales estimates are still "hittable."
Ives also noted Apple's massive installed base — consisting of 2.2 billion IOS devices — saying that demand around a coming upgrade cycle could "exceed 270 million iPhones" heading into the release of Apple's newest iPhone.
Ives additionally remains confident that Apple's June unveiling of its work in artificial intelligence will supercharge the company's performance.
"While some patience is required to navigate this China weakness, we believe the seeds for an Apple growth turnaround are being planted in the field," he said.
Ives maintained an "outperform" rating and a $250 price target, which remains the highest Apple price target out there.
The average Apple price target, according to TipRanks, is $202.
Shares of Apple lifted slightly following market open Tuesday.
Contact Ian with tips and AI stories via email, ian.krietzberg@thearenagroup.net, or Signal 732-804-1223.
