Despite Supply Chain Weakness, Credit Suisse Likes Apple's Long-Term Outlook

• Apple Inc. AAPL shares have declined 23.26 percent over the past six months, down to a low of $96.45 on Thursday.
• Kulbinder Garcha of Credit Suisse has maintained an Outperform rating and price target of $140 on the company.
• Despite the continuing supply chain weakness, Garcha has maintained his rating given Apple's high retention rate, continued growth in its installed base and optionality of a low-end iPhone.

Analyst Kulbinder Garcha mentioned that Qorvo Inc QRVO and Cirrus Logic, Inc. CRUS issued warnings regarding their December quarter revenues after market close on January 7.

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“Qorvo, which provides radio frequency solutions to Apple, now expects December quarter revenue of ~$620mn vs. their prior guidance of $720-$730mn,” Garcha stated, while adding that Cirrus Logic “derives around 80 percent of its revenue from Apple.”

Garcha noted that “the correlation between Cirrus Logic's revenues and Apple's revenues is around 0.75.”

The iPhone estimates for the December and March quarter have been maintained, as have those for CY16 and CY17. However, Garcha did warn of the potential for additional downside risk to iPhone unit shipments over the next few quarters.