Skip to main content

Market Overview

Apple iPhone Levels Signal Component Correction Coming, Pacific Crest Warns

Share:
  • Apple Inc. (NASDAQ: AAPL) shares are up 8 percent year-to-date, although trading meaningfully short of their 52-week high of $134.54.
  • Pacific Crest’s John Vinh said that the rising iPhone inventories point to a correction, and there is increased risk to component supplier outlooks for Q1.
  • Vihn added that investor expectations already anticipated this risk to outlooks due to channel inventory.

“Our monthly U.S. carrier surveys indicate increased risk to component supplier outlooks for Q1, given increasing channel inventories,” analyst John Vinh wrote. The surveys indicated that most of the retail stores noted an improvement in demand trends in November, driven by increased traffic associated with Black Friday.

“Despite improving sell-through trends in November, we see increased risk of an inventory correction, as retail store inventory levels of approximately 4.5 days have reached levels that were not seen until five months after the launch of the iPhone 6,” Vinh said. Although inventory levels are below the target levels of 8-12 days, Apple could reach the targeted levels soon.

Samsung seems to be doing a better job at managing its retail channel inventories this year, along with promotional activity. GS6 inventories are currently at just above 6 days, below the targeted levels and below the inventory level with the GS5 last year. Note 5 inventories also continue to be healthy and below targeted levels. “As a result, we see limited risk of an inventory correction for the Samsung supply chain,” the Pacific Crest report stated.

While the surveys indicate increased risk of an inventory correction, investor expectations are already likely to have largely priced these concerns, Vinh commented. He cited the favorite handset plays as Analog Devices, Inc. (NASDAQ: ADI) [PT: $70], ARM Holdings plc (ADR) (NASDAQ: ARMH) [PT: $63], Avago Technologies Ltd (NASDAQ: AVGO) [PT: $170], Maxim Integrated Products Inc. (NASDAQ: MXIM) [PT: $39], QUALCOMM, Inc. (NASDAQ: QCOM) [PT: $64] and Skyworks Solutions Inc (NASDAQ: SWKS) [PT: $100].

Latest Ratings for AAPL

DateFirmActionFromTo
Feb 2021RBC CapitalAssumesOutperform
Jan 2021DA DavidsonMaintainsBuy
Jan 2021Deutsche BankMaintainsBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

 

Related Articles (AAPL + ADI)

View Comments and Join the Discussion!

Posted-In: John Vinh Pacific CrestAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas

Latest Ratings

StockFirmActionPT
VORStifelInitiates Coverage On58.0
VORGoldman SachsInitiates Coverage On19.0
TERNJP MorganInitiates Coverage On32.0
TERNCowen & Co.Initiates Coverage On
TERNGoldman SachsInitiates Coverage On29.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com