Apple (AAPL) appears to have resolved the production bottlenecks that limited its supply of iPhones during the holiday shopping season, an analyst said Wednesday. Apple stock rose on the news.
“Our supply chain checks suggest iPhone 13 production bottlenecks have now been solved,” Raymond James analyst Chris Caso said in a note to clients Wednesday. Those bottlenecks included shortages of camera modules and Texas Instruments (TXN) power components, he said.
“We believe those constraints began to ease in early December, likely providing Apple with more supply than expected, and therefore providing an upward bias to (December-quarter) estimates,” Caso said.
On Oct. 28, Apple warned investors that supply constraints would negatively impact its fiscal first-quarter revenue by more than $6 billion. Apple’s fiscal first quarter ended Dec. 25.
Average Selling Prices Moving Higher
The improving iPhone supply should lead to a better-than-seasonal March quarter for Apple, Caso said. IPhone sales usually get a lift from the Feb. 1 Chinese New Year holiday in Asia, he said. Raymond James rates Apple stock as outperform, or buy.
Elsewhere on Wall Street, Loop Capital Markets analyst John Donovan says iPhone average selling prices are likely to be higher than analyst estimates in 2022.
The popularity of Pro model iPhones and models with more memory will boost average selling prices this year, he said in his note to clients Wednesday.
“Specifically, our work suggests Street (estimates) may be 10% too low on ASP,” he said. The average selling price for iPhones is likely to be $900 in 2022, up from $831 in 2021, Donovan says. Wall Street analysts on average predicted an average selling price of $817 for iPhones this year.
Loop Capital rates Apple stock as buy with a price target of 165.
On the stock market today, Apple stock rose 0.3% to close at 175.53.
Apple Stock Flirts With $3 Trillion Market Cap
Meanwhile, Apple has nearly reached a supply-demand balance for its latest iPhones, Goldman Sachs analyst Rod Hall said in a note Tuesday.
“Lead times for iPhones now suggest supply has mostly met demand,” Hall said. “We see lead times for iPhone Pro models at 1-2 days across most regions.”
The iPhone Pro Max models are slightly more supply constrained, with lead times of four days in the U.S., Hall says. However, Apple continues to face supply challenges for its new MacBook Pro computers, he said.
Hall rates Apple stock as neutral with a 12-month price target of 142.
In intraday trading on Jan. 3, Apple briefly hit a market value of $3 trillion when its shares reached 182.86. Apple was the first company to reach the milestone of a $3 trillion market cap. On Jan. 4, Apple stock hit an all-time high of 182.94 before retreating.
The next potential catalyst for Apple stock is the company’s December-quarter earnings report, set for Jan. 27.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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