Wedbush remains bullish on Apple after 'bumpy' China results
Investment firm Wedbush says its expectations for Apple are "firmly unchanged" as earnings showed a strong holiday quarter despite a decline in China.
Tim Cook at a game tournament in Apple Taikoo Li, Chengdu
Wedbush has been consistently pro-Apple since what it called a "very impressive" launch of the Apple Vision Pro. The company rose its Apple target price to $250, and has now announced that it is retaining that figure, even as JP Morgan cuts its target back.
"Apple delivered some good and bad news that will be focus on the Street today," wrote Wedbush analysts in a note to investors seen by AppleInsider, "with Cupertino beating the Street across the board although a weak China number and softer 'very conservative' March guidance will weigh on shares a bit."
Wedbush notes that iPhone sales exceeded predictions "by roughly $2 billion as Apple saw a strong holiday quarter with Services that grew 11% and remain in solid double-digit territory."
"Now to the bad news," it continues. "China revenues were down 13% in the quarter and headwinds persist in the region although when factoring currency the impact is a mid single digit decline."
Describing China as "a bumpy ride," Wedbush says that that investors will only partially buy Apple's excuses about difficult year over year comparisons. Its analysts say it's "no secret" that "Apple is struggling to battle Huawei and geopolitical headwinds near-term."
However, the firm does not see this as being as much of a significant issue long-term as others might.
"This is not the first time (or the last) Apple has struggled to navigate in China and just like a few years ago was able to turn this around into easier comps and a tailwind looking ahead," the investor note says. "The installed base in China has grown roughly 20% over the last 18 months and now of 1.2 billion iPhones globally more than 200 million iPhones are in China setting up for massive upgrade opportunity that we are modeling over the next 6 to 9 months."
Over the next to 18 months, Wedbush also sees "a pent up upgrade installed base" of users driving forward what's expected to be an "AI-driven iPhone 16/17."
Wedbush concludes that overall, the "quarter was a major step in the right direction which was neutralized by a soft March guide." It believes that the March guidance is likely to prove to have been "very conservative," and consequently that "Apple [is set] up well for the rest of the year."
"Our thesis remains firmly unchanged for Apple," says the note, "and we maintain our Outperform and $250 price target."
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