Apple Analyst Says China COVID Policy Reaching Tipping Point: How iPhone Sales Will Be Impacted

Apple, Inc. AAPL shares are trading lower in premarket trading on Monday after widespread protests broke out in China, which is its major production hub.

The Apple Analyst: Wedbush analyst Daniel Ives maintained an Outperform rating and $200 price target for Apple shares.

The Apple Thesis: The “zero COVID” policy has now reached a tipping point, with protests flaring across the country, Ives said in a note. “Apple is essentially caught in the cross-fire heading into the all-important Christmas time period,” he added.

The analyst estimates that at least 5% of iPhone unit sales will be impacted during the quarter due to significant iPhone shortages. The impact could increase up to 10% depending on how Hon Hai Precision Manufacturing Company Limited’s HNHPF production and protests pan out, he added.

See also: How Protests Against Xi Jinping Are Sending Apple, Tesla Stocks Lower Today

Many Apple stores are seeing iPhone Pro shortages of up to 35%-45% of typical inventory heading into December, the analyst noted.

“Our bullish thesis on Apple is demand driven which is very firm, although these brutal supply shortages in the near-term remain a clear overhang for the stock to navigate,” Ives said.

Apple Price Action: In premarket trading, Apple shares were down 1.92% at $145.26, according to Benzinga Pro data.

Read Next: How To Buy Apple (AAPL) Stock

Photo: Courtesy of shutterstock.com