Katy Huberty, analyst for investment banking company Morgan Stanley, argues that owed to price cuts, iPhone demand in China is recovering. However, fellow analysts are saying otherwise.
Huberty said: “After losing share in 4Q18, the Chinese iPhone installed base shows market share recovering after price cuts in early 2019.
Combined with stabilizing iPhone supply chain data points, we now see an upward bias to our iPhone estimates in the March quarter.”
Admittedly, Apple did record an install base decrease each month in the December quarter; however, it was up in both January and February. This is said to be down to a number of a factors, including price cuts, specifically to the iPhone XR. As well as this, Apple is offering better credit for those trading in older models. Discounts of up to $250 are also available for the iPhone XS Max.
Apple opted against slashing iPhone production builds last month; the first time they have done so since February – build estimates are actually ahead of predictions. This could mean that sales predictions are stable. And, with a price target of $197 on Apple stock, Huberty maintains an “overweight” rating.
Case against increased iPhone interest
Longbow Research contradicts Huberty’s case. Instead, they argue that iPhone trends are going from bad to worse, with interest down by 50% in China. They note that February supplier sales were “abysmal” with some 37 out of 42 reporting results that were worse than seasonal.
Shawn Harrison of Longbow claimed: “Without iPhone demand acceleration on the horizon, we currently do not see any catalysts near term to drive significant EPS upside.”
