Market Overview

3 Apple Stories JPMorgan Is Following


In a report published Monday, JP Morgan analyst Rod Hall discussed three Apple Inc. (NASDAQ: AAPL) related stories he is following.

Under-The-Radar Acquisition

Apple acquired Coherent Navigation, a GPS start-up that makes high-accuracy GPS devices and software.

According to Hall, the acquisition was made "under-the-radar" and comes at a time when the company is in the midst of a major overhaul of its Maps service. The company Apple acquired combine standard GPS data with data from the Iridium satellite communications constellation.

Apple Watch Yield Rate Rumor Clarified

Hall noted that Apple clarified rumors that the Apple Watch has a poor yield rate, and the company is considering outsourcing orders to other manufacturers including Foxconn.

Quanta Vice Chairman CC Leung said that the Apple Watch devices it was contracted to manufacturer is "no longer a challenge" to the company. Due to labor shortages during the Lunar New Year, Quanta was forced to take in manpower from other manufacturers and was only able to deliver a limited shipment during the first quarter.

Hall cited Digitimes in reporting Quanta now has sufficient capacity to manufacture existing open orders which could result in Apple reporting a "large contribution" from its wearable device business in the second quarter.

Apple Partner Reports Strong Q1 Print

Hon Hai reported its first quarter earnings which were 5 percent better than expected while gross margin and operating margin were also higher than expected, likely due to better yields on the iPhone.

However, Hall is expecting Hon Hai to lose some share to Pegatron iPhone and iPad volumes and its Apple revenues will flatten in the second half, after growing 23 percent year-over-year in the first half of the year.

Hall also added that the earnings print and market share loss for Hon Hai has a "neutral impact" on Apple.

Shares of Apple remain Overweight rated with an unchanged $145 price target.

Latest Ratings for AAPL

Jan 2021Cowen & Co.MaintainsOutperform
Jan 2021Morgan StanleyMaintainsOverweight
Jan 2021BarclaysMaintainsEqual-Weight

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