Apple Analyst Calls For A December Quarter Earnings Miss, Shaves Off Another 3M From iPhone Shipment Forecast

Apple, Inc. AAPL shares are trading down about a percentage point after a report suggested more production cuts could be in the offing amid softening demand.

Separately, an analyst at Morgan Stanley tempered his iPhone unit expectations.

The Apple Analyst: Erik Woodring maintained an Overweight rating and $175 price target on Apple shares.

The Apple Thesis: Apple supplier Hon Hai Precision Manufacturing Company Limited’s HNHPF production ramp has been three to four weeks behind schedule, analyst Woodring said in a note. Production at Hon Hai’s Zhengzhou plant is unlikely to reach full production until early 2023 and the supplier’s Shenzhen and Taiyuan plants have not been able to pick up the slack from Zhengzhou, the analyst said.

Accordingly, the analyst cut his December quarter iPhone shipments forecast by another three million units from 78.5 million units to 75.5 million units, suggesting an 11% year-over-year decline.

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The March quarter iPhone shipment forecast remained unchanged at 56.5 million units, meaning none of the December quarter shortfalls will likely be deferred to the March quarter, he added.

Woodring clarified that the new estimates are based on an overly conservative approach, adding that de-risking estimates is a prudent decision considering the uncertainty around the production in China.

The analyst also took down the December quarter revenue estimate to $120.3 billion, 3% below the consensus estimate, and the earnings per share estimate to $1.88, 6% below the consensus estimate. This is partly based on a 1% reduction in Morgan Stanley’s iPhone ASP forecast to $916 due to the lower Pro model mix.

Apple Price Action: Apple shares were slipping 0.93% to $141.58 on Wednesday, according to Benzinga Pro data.

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