iPhone demand said to be ‘robust,’ recent cuts don’t reflect weak demand

iPhone 5 Demand Robust

Following recent reports from Nikkei and The Wall Street Journal that suggested Apple (AAPL) slashed iPhone 5 component orders in half due to weak demand,  the company’s stock fell significantly and opened below $500 for the first time in nearly a year. The reports have been called into question, however, with many believing they do not represent true consumer interest. Shaw Wu of Sterne Agee wrote in a note to investors on Tuesday, per Apple Insider, that his supply chain checks have indicated that demand for the iPhone 5 “remains robust.” The analyst believes the recent reports are a result of improved yield rates and possibly Apple’s recent supplier changes.

Despite the recent concerns, Wu expects Apple to post better-than-expected earnings for the December quarter led by sales of 47.5 million iPhones with a gross margin of 38.7%. Both estimates are above Wall Street’s expectations of between 46 to 47 million iPhones and a 38.3% gross margin.

Sterne Agee reiterated its Buy rating on shares of Apple with a price target of $840.

Wu’s expectations remain bullish compared to other Wall Street analysts. Stuart Jeffrey of Nomura is the most recent analyst to cut his outlook on Apple stock. Nomura reduced the company’s price target to $530 from $660 Tuesday morning, citing weak demand for the iPhone 5 and increased pressure on Apple’s margins.

Source:
Apple Insider
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