Apple slips as Morgan Stanley cuts iPhone estimates for second time in less than a month - Seeking Alpha

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Apple (NASDAQ:AAPL) shares slipped astir 1.5% successful premarket trading connected Wednesday arsenic Morgan Stanley lowered its iPhone estimates for the second time successful little than a month, citing a slower ramp successful Foxconn's Zhengzhou plant.

Analyst Erik Woodring, who has an overweight standing and $175 terms target, present sees Apple (AAPL) iPhone shipments of 75.5M successful the quarter, down from the anterior presumption of 78.5M. He besides kept his iPhone shipment estimation for the adjacent 4th astatine 56.5M unchanged, implying that nary of the shortfall successful the existent 4th would beryllium moved to the next.

"While we mightiness beryllium taking an overly blimpish attack fixed our Greater China Hardware squad ... estimates conscionable a 1-2M portion incremental shortfall from the slower iPhone accumulation ramp, ... we besides judge much thoroughly de-risking estimates contiguous is the prudent determination considering the uncertainty of the accumulation concern successful China," Woodring wrote successful a enactment to clients.

Woodring noted that Foxconn, besides known arsenic Hon Hai Precision (OTCPK:HNHPF), is betwixt 3 and 4 weeks down docket for iPhone accumulation astatine the Zhengzhou, China works arsenic a effect of the country's COVID-19 lockdowns and idiosyncratic unrest.

The expert present expects Apple (AAPL) to make net of $1.88 per stock connected $120.3B successful gross successful the existent quarter. Woodring besides lowered his gross borderline forecast to 42.5%, astatine the debased extremity of Apple's (AAPL) ain guidance.

A statement of analysts expect Apple (AAPL) to gain $2.02 per stock connected $124.56B successful sales.

In aboriginal November, Apple (AAPL) warned that proviso concatenation issues successful China resulting from the country's strict COVID-19 policies would effect successful little iPhone 14 Pro and Pro Max shipments than antecedently estimated.

Looking ahead, Woodring conceded that "it's much likely" that astir of the request that did not spell filled successful the December 4th is pushed retired aboriginal successful the fiscal year, but fixed the problems successful China, arsenic good arsenic the planetary economical slowdown, it's not 100% wide what request trends are.

"Given iPhone 14 Pro/Pro Max pb times stay elevated astatine 3+ weeks, 10-15 days up of the supply-constrained iPhone 12 Pro and 13 Pro/Pro Max astatine this constituent successful the cycle, we judge request for the iPhone 14 Pro/Pro Max remains solid, supporting the presumption that mislaid request successful December is much apt to beryllium deferred into March than destroyed," Woodring added.

On Tuesday, concern steadfast UBS said it had seen grounds of improving hold times for the iPhone 14 Pro and iPhone 14 Pro Max successful 30 countries, suggesting that the proviso concatenation headwinds Apple (AAPL) has dealt with are starting to easiness up.