As the June quarter draws to a close, Apple, Inc.'s (NASDAQ:AAPL) bull and Wedbush analyst Daniel Ives offered his thoughts on the quarter.
The Apple Analyst: Ives reiterated an Outperform rating and $200 price target on Apple stock. The analyst also said the company is his favorite tech name.
The Apple Thesis: Asia iPhone supply chain checks have shown a steady and slight improvement over the past few weeks, Ives said in a note. As of now, iPhone demand is holding up slightly better than expected, he added.
The market has already digested the June quarter weakness and is looking past it, into the September and December quarters, Ives said. The China issues and supply chain, according to the analyst, should be a peak worry in the June quarter and then subside into the key September/December quarters on the heels of a new iPhone 14 launch.
Related Link: Why Apple Has 'Little To Lose, A Lot To Gain' By Expanding Its Services To Android Devices
Apple is likely modeling iPhone production of flat to slightly higher than the iPhone 13 output, which reflects the company's confidence in the demand picture despite a jittery macro environment, the analyst said.
"With an unparalleled installed base of 1 billion iPhones worldwide and 1.8 billion iOS devices for Cupertino, this continues to remain Apple's unique advantage over other technology stalwarts," Ives said.
The company's Services business appears strong into the rest of 2022/2023, the analyst said. Revenue from the segment will likely reach $80 billion in 2022 and grow at a double-digit clip in 2023, he estimates.
"On a growth and EBITDA basis, we believe Apple's services business is worth alone north of $1 trillion which coupled with the flagship hardware business makes the risk/reward very compelling at current levels," Wedbush said.
Apple Price Action: Apple shares were up 1.82% to $139.94 on Wednesday morning, according to Benzinga Pro data.
