Apple, Inc. AAPL reported Thursday better-than-expected second quarter results, but the management commentary on the earnings call centered around supply chain challenges and the impact.
A prominent Apple analyst offered his takeaways from the quarterly results and the stock trajectory going forward.
What Happened: Weak iPad performance is due to the company prioritizing supply of components shared by the iPhone and iPad, TFI Securities analyst Ming-Chi Kuo said.
The analyst noted that he expects supply disruptions stemming from China lockdowns to improve within two months if COVID is controlled well. Thanks to Apple's excellent supply chain management, the China lockdowns have not affected the development of most of Apple's unannounced products in 2022, the analyst said.
Apple has suggested that the $4 billion to $8 billion impact from supply constraints in the second quarter is "deferred demand and not disappeared demand," Kuo said.
The analyst said it is difficult to evaluate the impact of the lockdown on demand. Postponing shipment forecasts appears more like a procurement management standard operation procedure, he added.
Kuo said he believes Apple Car development could get back on track and run smoothly if Apple can acquire larger companies.
The Apple analyst also said he sees only limited upside or downside for Apple stock until visibility on the year-over-year change for the June quarter improves.
Related Link: Apple Analysts See Production Issues As Transitory, Recommend Buying On Weakness Following Q2 Results
Why It's Improvement: Apple has a slew of product launches scheduled for the second half of the year. The improvement in the COVID situation in China and a quick ramp at its key suppliers running manufacturing plants in the country is important for Apple to execute on its plans.
Apple's chief executive officer Tim Cook said on the earnings call, nearly all of the company's final assembly factories have now restarted and that reported COVID-19 cases have dropped in Shanghai in recent days.
Following the quarterly results, sell-side analysts said they see the production issues as transitory.
Apple closed Friday's session down 3.66% at $157.65, according to Benzinga Pro data
Related Link: Why Apple Has 'Little To Lose, A Lot To Gain' By Expanding Its Services To Android Devices
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