Reports of production disruptions at major suppliers have left Apple, Inc. (NASDAQ:AAPL) may have some investors worried but an analyst at KeyBanc Capital Markets is confident of Cupertino turning in another strong quarter when it reports later this month.
The Apple Analyst: Brandon Nispel maintained an Overweight rating and $191 price target for Apple shares, suggesting an upside 15% above current levels.
The analyst continues to recommend owning Apple shares.
The Apple Thesis: Apple's hardware unit shipments in the March quarter are trending ahead of expectations, analyst Nispel said, citing KeyBanc's first look data.
Historically, hardware shipments of Apple fall 35% from the seasonally strong December quarter but the consensus estimate for the March quarter of 2022 calls for a less severe 29% drop, the analyst noted.
"In other words, consensus expects an above typical seasonal growth quarter, despite difficult comparisons," he said.
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Despite the talks of consumer spending weakening, it is not yet reflected in KeyBanc's data, Nispel said. Wearables and accessories, which are more discretionary than the iPhone and Mac, could feel the pinch of any potential consumer softening, he added.
Given the initially disappointing iPhone SE3 shipments, the analyst said he is revising his iPhone mix assumptions to include more iPhone 13s in his estimate. The analyst maintained his March quarter iPhone unit sales estimate unchanged at 58.3 million units compared to the consensus of 57.7 million units.
Due to the changes in the mix shift in his model, Nispel raised his iPhone revenue estimate by 1.1% to $49 billion, which is slightly ahead of the consensus. Factoring in the IDC PC shipment data that suggest 7 million Mac shipments, the analyst increased his Mac revenue estimate to come in slightly above consensus.
Price Action: Apple shares closed Monday's session down 2.55% at $165.75, well off its all-time high of $182.94 reached in early January.
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