The Ratings Game: Apple stock dips amid questions about iPhone production disruptions at Foxconn


Apple Inc. continues to be dogged by concerns about the pandemic’s impact on production after recent reports indicated that strict COVID-19 restrictions in China were affecting Foxconn, which manufactures iPhones.

Reuters reported Monday morning that Hon Hai Precision Industry Co Ltd., which is better known as Foxconn, had seen some workers leave its Zhengzhou plant over the weekend amid dissatisfaction about COVID-19 measures. The report also cited one person “with direct knowledge of the matter” who said that iPhone production could fall by as much as 30% next month as a result of pandemic restrictions in the country.

Apple shares

were off 1.1% in midday trading Monday.

Representatives for Apple and Foxconn didn’t immediately respond to MarketWatch’s request for comment on the production disruptions.

Read: Apple and Microsoft market caps reached their largest spread on record — at roughly Tesla’s entire valuation

Analysts were split on how much the issues could affect Apple, with Mizuho desk-based analyst Jordan Klein, who’s associated with the company’s sales team and not its research arm, writing that production hiccups create some risk that Apple will see undersupply in the December quarter and then oversupply in the March quarter.

“In sum, we see neutral impact over medium term,” since “all that really matters is true end demand,” Klein wrote. “If anything, I view this as a POSITIVE as tight supply limits risk AAPL slows production in Dec qtr, and demand push into Mar offers a buffer on seasonal slowdown.”

Barclays analyst Tim Long was more pessimistic.

“We did some channel checks in local language with our contacts in China over the weekend,” he wrote. “We came away incrementally negative on the prospect for AAPL to meet consensus estimates for Dec-Q, even though they just reported last week.”

Given the Zhengzhou plant’s outsized importance to iPhone production, particularly of Pro models, Long said that the COVID outbreak “again highlights a key, yet often overlooked, risk for AAPL: there is manufacturing concentration risk in China.”

He rates Apple’s stock at equal weight with a $156 price target.

Don’t miss: A $3 trillion loss—Big Tech’s horrible year is getting worse

Coronavirus Update: New omicron subvariants accounted for more cases in New York region in latest week than BA.5, CDC data shows

Previous article

Cannabis Watch: Cannabis edibles company Wyld builds national footprint as it keeps hiring

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in News