Apple’s production issues amid coronavirus could delay iPhone launches, Bank of America warns - MarketWatch

Apple Inc. could face supply constraints into April or May and might have to postpone launches of highly anticipated devices, according to a new report from Bank of America Merrill Lynch analyst Wamsi Mohan.

He lowered his price target on Apple shares AAPL, -3.19% to $320 from $350 in a Wednesday note to clients, writing that the effects of the coronavirus outbreak will likely delay the introduction of the iPhone SE2, a cheaper smartphone that some were expecting to be revealed this spring. Mohan expects this launch to be delayed until the second half of the calendar year now.

See also: Apple sees China iPhone shipments tank in ‘doomsday’ scenario, but bull says to keep the faith

He’s still modeling a September unveiling for a flagship 5G-enabled iPhone line, but he contends that there’s a possibility this could also become delayed. “The actual launch timing will depend on how production ramps back up in April and May,” Mohan wrote. A UBS analyst also cautioned earlier this week that the coronavirus could push back the launch of Apple’s 5G model.

Mohan’s note highlights labor shortages and reduced productivity that have been hampering iPhone production in recent weeks. While the supply chain is hoping to catch up in April by boosting production by 10% to 20% above normal levels, he said, Apple must also now contend with demand issues.

“We now expect a more negative impact to global demand, as COVID-19 has spread well beyond China,” Mohan wrote, referring to the disease brought on by the novel coronavirus that is thought to have originated in Wuhan, China in December 2019.

Read: Why don’t we panic about climate change like we do coronavirus?

Mohan cut his calendar 2020 estimates for iPhone, iPad, Mac, Apple Watch, and accessories sales in his latest note, while also indicated that the coronavirus crisis could “to some extent” impact demand for Apple’s services offerings. He is still bullish about Apple over the long term, reiterating a buy rating on the shares.

Apple shares are off 3.1% in Wednesday trading, as the Dow Jones Industrial Average DJIA, -4.90% is down 4.1%. The stock has lost 6.2% on the year, compared with a 16% decline for the Dow over that span.

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http://www.marketwatch.com/story/apples-production-issues-amid-coronavirus-could-delay-iphone-launches-bank-of-america-warns-2020-03-11

2020-03-11 15:36:36Z
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