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'No Evidence' Of iPhone X Component Cuts, Says Rosenblatt Analyst

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'No Evidence' Of iPhone X Component Cuts, Says Rosenblatt Analyst
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Apple Inc. (NASDAQ: AAPL) shares have shown a lack of direction since the commercial release of the iPhone's latest iteration. 

Shares were lower Tuesday on concerns triggered by a reports of a downward revision to the iPhone X forecast. But a Rosenblatt Securities analyst sees no reason as to why the stock should move down.

The Analyst

Rosenblatt Securities analyst Jun Zhang maintained a Buy rating and $180 price target on Apple.

The Thesis

No evidence exists of further component order cuts — especially orders for iPhone X-specific 3-D sensing or OLED panels — after the holiday season, Zhang said in a Tuesday note. (See the analyst's track record here.)

Taiwanese media reports and estimate cuts could be confusing the market and are referring to previously mentioned iPhone 8/8 Plus production cuts, Zhang said.

The analyst said he expects an iPhone X production ramp in December and maintained his iPhone X production estimate of 35 million-plus units for the March quarter.

"Overall, iPhone component suppliers could see a 25-percent decline QoQ in the March quarter; however, iPhone X component suppliers would still see a flat sequential March quarter."

In the North American market, iPhone X sales were stable throughout the holiday season, while sales have likely accelerated in the Chinese market over the last two weeks, Zhang said. Citing Rosenblatt's industry research with Chinese operators, the analyst said iPhone X sales likely surpassed combined iPhone 8/8 Plus sales so far.

The recent estimate adjustments could be attributed to previously bullish views on the iPhone X cycle, Zhang said.

The Price Action

Apple shares have gained about 51 percent year-to-date.

At the time of publication, the shares were down 2.62 percent at $170.42.

Related Links:

Survey: Santa Is Bringing Strong Apple iPhone X Holiday Sales

Apple Analyst Shrugs Off Demand Concerns: 'Gross Margin Is The Key'

Photo courtesy of Apple.

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Apr 2018Monness Crespi HardtInitiates Coverage OnBuy
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