A closely watched Apple analyst on Wednesday highlighted some potential noise surrounding the iPhone maker in the coming quarter of December, underscoring why we are routinely warned against trading in and out of stocks. Apple (AAPL) shares were spared this year’s technology defeat. However, while the company is down about 24% in 2022, the company’s market capitalization is still around $2.15 trillion. In a note to clients, Bernstein analyst Tony Sakunagi discussed two main reasons why he thinks Wall Street estimates for Apple are too high — and as a result, why he thinks they could be revised lower in the future. The first reason was Apple’s announcement over the weekend, in which the tech giant said it was reducing production of the iPhone 14 Pro and iPhone 14 Pro Max due to Covid restrictions at a major assembly plant in China. Although it continues to see “strong demand” for high-end phones, Apple now expects fewer shipments than it previously expected and customers will see longer wait times to receive their new products, according to Sunday’s press release. Sakunagi voiced some issues with Apple’s press release, saying it was “fuzzy in not specifying when Apple expects fewer shipments — just the December quarter, or the whole year.” Furthermore, the fact that the release occurred so early in the quarter (when Apple ostensibly could have made up for lost production days) begs the question whether demand for the iPhone or other products has been negatively affected, or what If Apple felt the consensus estimate for fiscal Q1 was simply too high,” the analyst, who has a neutral rating for Apple stock and a $170 share price target, wrote the analyst. Reason #2 goes beyond the second concern cited by Sakunagi trying to decode a three-paragraph press release. Instead, the analyst delved into the impact of Apple’s abnormal fiscal year 2023 calendar on Street’s financial models. Apple’s first quarter is 14 weeks long this year and ends on December 31 instead of the traditional 13 weeks. The analyst believes that this could lead to the allocation of revenue for the first quarter, which is usually recorded in the second quarter for Apple. This may result in some revenue estimates for the second quarter being too high. Our analysis indicates that the consensus did not include an additional week in its forecast, as it models a historical normal revenue distribution throughout fiscal year 23. [fiscal year 2023] — that is, it expects AAPL to generate 31% of its annual revenue in the December quarter, which is roughly in line with its historical average (31.1%).” The quarter is between Christmas Day and New Year’s Day,” which is usually a week strong for Apple sales.” He continued, “If sales in the last quarter were loaded up due to production delays, the week could be significantly strong for Apple. However, the analyst acknowledges that there is another possible scenario – that production delays could be large enough to push a large portion of sales into January. This means that they will then be recorded as revenue in Apple’s fiscal second quarter, which is usually weaker from the first quarter because the first quarter benefits from holiday sales.” While the delay in production could dampen seasonality in the first and second quarters, we still believe the second half of fiscal year 23 [second half of fiscal year 2023] The FY23 estimate is too high,” Sakunagi wrote. “Club opinion We continue to believe that Apple is a stock that should be owned, not traded. For this reason, we maintain a big picture view emphasizing long-term trends around its competitive moat, brand loyalty and free cash flow generation. This context is important in understanding how we think by noting Sakunagi and this moment for Apple in general. We do not recommend investors to step in and buy Apple stock here, because realizing that the macro environment complicates stock valuations of large-cap technology companies. This is part of the reason we have Apple cut its target price last week despite a better-than-expected last fiscal quarter, also referred to as the September quarter.Apple shares on Wednesday are trading at nearly 22 times forward earnings, above the five-year average of 21.4, according to For FactSet.Given all the risks, such as consumers worried about inflation and a strong US dollar, we think the value of Apple is too rich to step in and start buying stocks.At the same time, we don’t Recommend investors to get out of the stock now and then try to come back at a lower point. It is very difficult to time the market like this. Instead, Apple shareholders should be patient, especially as we go through a period when there is a lot of noise surrounding the stock. For example, we face a steady number of questions about the demand for the iPhone 14, especially whether it will hold up with the Pro and Pro Max models. In a note on Wednesday, Sakunagi notes that a bit of sluggish demand could play a role in the aforementioned iPhone production cuts. We take a different view. While it’s an ever-evolving situation, we believe demand at the moment still outstrips supply for higher and higher margin iPhone 14 models. Morgan Stanley echoed that position in a note to clients on Tuesday. As for the extra week in Apple’s first quarter, we don’t get much into it because of the extended horizon. It’s not something that should be completely ignored – it’s useful to realize that some estimates can be revised as the street becomes clearer about the immediate impact of the unusual fiscal calendar. This process may spark negative news headlines and daily conversations about the company. But at the same time, it doesn’t change our thesis, and if anything, it strengthens our conviction that Apple is a name to own for the long term, not a name to make quarter-by-quarter trades. When you take a long-term investment viewpoint, you can approach things like an extra week in a quarter with a different perspective than short-term thinkers. (Jim Cramer’s Charitable Trust Long AAPL. See here for a full list of stocks.) As a CNBC Investing Club with Jim Cramer, you’ll receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable fund portfolio. If Jim talks about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. The above investment club information is subject to our Terms and Conditions and Privacy Policy, along with our disclaimer. No fiduciary obligation or duties will be created by the employees, or created, by virtue of your receipt of any information provided in connection with the Investment Club. There are no specific results or guaranteed profit.
Apple CEO Tim Cook speaks on stage during the second day of the Code 2022 conference organized by Vox Media in Beverly Hills, California.
Jerrod Harris | Getty Images Entertainment | Getty Images
A closely watched Apple analyst on Wednesday highlighted some potential noise surrounding the iPhone maker in the coming quarter of December, underscoring why we are routinely warned against trading in and out of stocks. shares apple (AAPL) was not without a technical defeat this year. However, while the company is down about 24% in 2022, the company’s market capitalization is still around $2.15 trillion.
#Apple #iPhone #production #delayed #due #Chinas #Covid #Club #sticks #stock