Apple shares continued to fall after news that the company was keeping its original iPhone 14 production target, but two prominent analysts weren’t worried. In two notes to investors, analysts from Morgan Stanley and Wedbush said a recent report on iPhone 14 series production shouldn’t worry investors. Wednesday’s report said Apple is slightly scaling back production of the iPhone 14, maintaining its target of 90 million devices in the second half of 2022.
access:
Apple Online Store (China)
The move reportedly represents a drop of 6 million units from Apple’s original estimate. If accurate, this would bring iPhone 14 production in line with the iPhone 13 lineup over the same period – which was instead stronger (the Chinese social network buzzword describes the phenomenon as “thirteen incense”).
Daniel Ives and John Cassingris from Wedbush highlighted strong demand for the iPhone 14 Pro models. The mix of iPhone 14 Pro models and non-Pro models is said to shift to 85% to 90%, while the mix of iPhone 13 Pro models is around 60% to 65% at this stage of the cycle.
“Our positive thesis on Apple remains unchanged, and our view that demand for the iPhone 14 Pro is strong will allow Apple to weather near-term macro headwinds better than the market fears,” Wedbush’s note said. “The weakness in the base iPhone model is a clear sign that in this weak macro environment, consumers are not paying for an expensive smartphone with minimal improvement over the iPhone 13, while the Pro model is a different story entirely. A story that totally sees positive demand.”
Morgan Stanley then issued a note of their own, saying that iPhone 14 production is expected to be in line with their production forecast.
Both notes discuss the wait times customers face for orders for the Pro models, as well as the heightened interest among early consumers on the iPhone 14 Pro lineup, as opposed to the iPhone 14 and the yet-to-be-shipped iPhone 14 Plus.
The wait for shipment of the iPhone 14 Pro series has been extended to November, and Apple suppliers such as Foxconn are restructuring production lines, shifting iPhone 14 production to iPhone 14 Pro models to meet demand.
An analysis by investment bank Morgan Stanley shows that the iPhone 14 Pro has the longest delivery time of any model released over the past six years, at 36.5 days, in a similar period after its launch. The iPhone 14 Pro was on par with the iPhone 13 Pro models at 29.5 days.
Data recently shared by JPMorgan said the average delivery time for the iPhone 14 Pro is 35 days and the Pro Max is 41 days.
Wedbush maintained its August 2022 Apple price target of $220. This target is based on 19 times the services business, or $1.6 trillion, and seven times the hardware business, or $2.1 trillion.