Apple Stock Rose as Results May Reveal iPhone Demand and China’s Market Reopening

Apple Stock

Apple Stock (NASDAQ:AAPL)

On Thursday, Apple (NASDAQ:AAPL) will release its financial data for the first quarter of its fiscal year. The report may lighten the company’s supply chain and its effect on the crucial iPhone.

Apple issued a statement in November expressing concern that interruptions in China caused by the COVID-19 virus might result in decreased sales of iPhone 14. Foxconn, commonly known as Hon Hai Precision (OTCPK:HNHAF), is Apple’s major iPhone producer. Since then, it has seen labor unrest and felt the effects of China’s COVID-19 laws, both of which led to a precipitous decline in revenue in November. Foxconn’s revenue took a nosedive in November. Still, it quickly recovered in December when production at the company’s critical iPhone facility in Shenzhen, China, resumed.

China has also eased travel restrictions and repealed other COVID-19 laws that stifled economic development in the world’s most populous nation.

According to experts, earnings per share for Apple are predicted to come in at $1.96 on sales of $122.05B.

As the global economic picture weakens and recession concerns surface, investors may get insight into the consumer’s health from Apple and its management, headed by CEO Tim Cook.

Even though Apple stock has soared this year, Wells Fargo has lowered its forecast for 2023 because of “growing consumer demand weakness,” given the company’s strong performance so far this year.

Because of “overall demand push-out vs. weakening consumer demand” and “uncertainties over the pace of a post-COVID China lock-down recovery,” analyst Aaron Rakers predicted that “calendar 2023 iPhone shipments” would be 216.4 million units, a decline of seven percent from the previous year and a drop of about 10 percent from the consensus estimate.

Wamsi Mohan, an analyst at Bank of America with a neutral rating and a $153 price target per share on Apple, recently predicted that the company’s March quarter forecast might be much worse than expected, as much as 20%.

Given that “the [December] quarter was severely supply restricted for the higher-end Pro versions of iPhones,” Mohan said in a note to clients, “the tone on the call will be critical to understanding the underlying demand trend.”

Mohan also said that his iPhone tracking data indicates that supply and demand have stabilized, causing him and his team to conclude that demand may be less than anticipated in 2023’s first half.

Mohan said it would be a “net positive” if Apple saw a re-acceleration in services owing to the strengthening environment for video games and stability in advertising.

Mohan said other potential benefits include a weaker effect from currency fluctuations, China’s ongoing openness, and vertical integration gains as Apple brings more components in-house.

In anticipation of the iPhone maker’s fiscal first-quarter earnings report next week, Deutsche Bank lowered its 2023 predictions for Apple stock last month.

Featured Image: Pexels @ Tranmautritam

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