These are not the best of times for Apple (NASDAQ:AAPL) with the tech giant facing headwinds in its key China market. Huawei’s increasing market share, coupled with geopolitical tensions (the ban on iPhones in certain Chinese agencies), alongside a somewhat weakened Chinese economy, have all contributed to a challenging sales landscape for Apple in China during Q1.
In fact, citing all those reasons above, Wedbush analyst Daniel Ives thinks Apple is “navigating one of the more difficult China demand environments we have seen the last 5 years as a combination of factors has created a perfect storm for Cupertino in this key market.” As such, for the March quarter, Ives anticipates China iPhone units will be “likely down moderately again” on a year-over-year basis.
That said, based on an early April trip to Asia, Ives makes the case that data points from the supply chain suggest that iPhone production has remained consistent with the forecasts set at the beginning of the year. “While not a positive result per se, we believe this result is better than had been feared in light of concerns share loss in China will heavily weigh on Apple results/units,” Ives said on the matter.
While China has obviously underperformed in recent times, Ives thinks other regions such as the US, Europe, and India “have been relatively strong” in the quarter and should go toward offsetting a soft China number. And although Ives thinks the Street is “bracing for a brutal March quarter” and a potentially subdued June guide, he anticipates that could mark the final stages of this “growth storm.”
Once the company navigates through the next couple of quarters, buoyed by a combination of “easier comps, AI announcement at WWDC, stronger upgrade cycle for iPhone 16, and the monetization opportunity of the golden installed base,” heading into the September quarter and FY25, Apple should start to see a “renaissance of growth.”
“While some patience is required to navigate this China weakness, we believe the seeds for an Apple growth turnaround are being planted in the field,” he summed up.
Accordingly, Ives rates Apple shares an Outperform (i.e., Buy) along with a $250 price target. The implication for investors? Upside of 48.5% from current levels. (To watch Ives’ track record, click here)
Amongst Ives’ colleagues, current support for Apple is decent but not conclusive. Based on 16 Buy recommendations vs. 10 Holds and 1 Sell, the stock has a Moderate Buy consensus rating. The average price target stands at $202.95, suggesting one-year gains of ~21%. (See Apple stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
