Demand for Apple iPhones has been coming back in China, says one Wedbush analyst.
Wedbush analyst Dan Ives increased his price target on Apple AAPL +0.84% stock (ticker: AAPL) to $190 from $180 and maintained his Outperform rating on the stock. The longtime Apple bull wrote in a research note Wednesday that demand has rebounded in China following a weak December. Beijing rolled back the country’s strict zero-Covid 19 lockdowns lockdown policy early that month.
“Our Asia iPhone supply chain checks this week have been incrementally more positive with a modest uptick in demand coming out of China for Apple with a clear demand rebound happening in this key region post December despite the uncertain macro backdrop,” Ives wrote.
iPhone sales are vital for Apple. Smartphone revenue made up $65.8 billion of its total December quarter sales of $117.2 billion. Overall sales from China made up $23.9 billion in revenue last quarter, behind Europe and the U.S. among five regions for which Apple discloses data.
But both iPhone and China sales were down from the prior year as the company faced significant production challenges in China.
“Because of these constraints, we had significantly less iPhone 14 Pro and iPhone 14 Pro Max supply than we planned, causing ship times to extend far beyond what we had anticipated,” Chief Executive Tim Cook said in the company’s latest earnings call in February. The iPhone 14 Pro and Pro Max are the newest, most expensive models of the smartphone.
Looking ahead, Ives is confident that demand is strong and says that there are “no major unit cuts from suppliers in Asia around iPhone production yet, which is a good sign that shows a steady demand curve on the flagship iPhone 14 Pro in March/June.”
Ives also expects to see continued market share gains for the company as people upgrade their phones to newer models. He estimates approximately 25% of current iPhone users haven’t upgraded their device in four or more years.
Shares of Apple were up 0.8% Wednesday to $152.81. The stock has gained 17% this year.