Due to supply chain issues in China, investment firm Piper Sandler lowered its expectations for Apple stock (NASDAQ:AAPL) on Thursday. Analyst Harsh Kumar, who rates Apple (AAPL) as overweight and has a price target of $195, now expects revenue for the December quarter to be $119 billion, down from a previous prediction of $127.3 billion, because the loss of 9 million iPhones may have an effect on sales.
A decrease from his prior forecast of about 83 million iPhone units sold in the quarter, Kumar now projects sales of 74 million units. The analyst continued, “Apple (AAPL) will do everything it can to catch up on production in December, particularly in the first two weeks of the month.”
Kumar wrote in a note to clients that, even though Apple has tried to move production out of China, “India still makes less than 5% of all iPhone 14s and is unlikely to help much at this point.” Even though COVID-19 restrictions have been lifted for the whole city, information released on Thursday says that Foxconn’s factory in Zhengzhou, China, will still use a closed-loop system. In premarket trade, Apple’s (AAPL) shares marginally increased to $148.20.
The supply disruptions coming from China and “softer demand” for the entry-level models of the iPhone 14 lineup were the reasons given by investment firm UBS for the Thursday reduction in its iPhone build forecast. Despite Zhengzhou opening up, Foxconn is still in a closed loop.
Developments behind Apple stock forecast
Bloomberg said that Foxconn’s (also known as Hon Hai Precision’s) factory in Zhengzhou would still use a closed-loop system even though the city had removed COVID-19 restrictions.
Foxconn will maintain the restrictions put in place weeks ago that curtailed worker movement in response to a COVID-19 outbreak, the news source reported, quoting a source familiar with the company’s operations. Workers are limited to their dormitories or the manufacturing floor under the closed-loop system. In keeping with a closed-loop approach, it might also make it more difficult for Foxconn to ramp up full iPhone manufacturing for Apple (NASDAQ:AAPL).
The lockdown restrictions in Zhengzhou, also known as “iPhone city,” were lifted on Tuesday, but some analysts are worried about the future of the tech giant in China after it had to deal with production problems caused by the country’s “zero COVID” policy.
Foxconn workers who helped hire more people at its Zhengzhou plant were given bonuses of 1,000 yuan, or $141.11, for each successful hire referral, it was learned yesterday.
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