Apple Inc. AAPL has entered its historically strongest quarter that encompasses the holiday season. This time around, expectations are muted, given the supply chain is in a disarray.
One analyst, however, is optimistic on the outlook for iPhone sales.
The Apple Analyst: Wedbush analyst Daniel Ives maintained an Outperform rating and $185 price target.
The Apple Thesis: Heading into Black Friday, delivery times for Apple's iPhone 13 Pro have lengthened, as demand is likely outstripping supply by about 15%, Ives said.
Despite the chip shortage, demand trends for the iPhone 13, both in the U.S. and China, is tremendous, the analyst said. This is a positive sign that Apple could exceed selling 80 million iPhone units in the quarter, with stronger Pro versions driving higher ASPs.
Apple is on pace to sell about 40 million iPhones between Black Friday and Christmas, marking a record holiday pace, Ives estimates. This is despite the lingering chip shortage limiting iPhone supply globally by roughly 10 million units.
China alone may have seen about 15 million iPhone 13 upgrades for the December quarter, the analyst said. This would be the key region, remaining a major source of strength for Apple heading into 2022 and beyond.
"While the stock has stagnated as the chip shortage has become the Grinch heading into Christmas for Apple with iPhone supply issues, we believe Cook & Co. have been able to get more iPhones into the retail channel over the past few weeks which is a step in the right direction with holiday season around the corner," Ives wrote in the note.
Supply chain issues are nothing more than a speed bump on a multi-year super-cycle iPhone 12/13 that continues to play out, the analyst added.
Based on refresh rates and the new design around AirPods 3, Apple could ship close to 100 million AirPod units with a strong holiday performance already underway.
AAPL Price Action: Apple shares were edging up 0.7% to $151.07.
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