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Apple (AAPL) Prospects Benefit From iPhone Production Increase

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Apple (AAPL - Free Report) is benefiting from the robust performance of its flagship iPhone. Sales increased 47% year over year in the fiscal fourth quarter to $38.87 billion and accounted for 46.6% of total sales, courtesy of strong demand for iPhone 12.

However, supply chain constraints due to industry-wide chip shortages and COVID-related manufacturing disruptions remain headwinds. These factors hurt revenues roughly by $6 billion. Apple expects supply chain constraints to hurt the top line significantly in the first quarter compared with the fourth quarter.

Per Investor’s Business daily report, Mizuho Securities analyst Yasuo Nakane lowered estimates for iPhone production in the fourth quarter to 90 million units from 95 million — a production decrease of 4% year over year.

However, in the first quarter of 2022, Nakane expects Apple to make 66 million iPhones, up 20% year over year. Meanwhile, the same for the full year of 2022 is expected at 259 million iPhones, reflecting an increase of 9%.

Apple Inc. Price and Consensus

Strong iPhone Demand to Aid Apple Hit $3 Trillion Market Cap

Apple currently has a market cap of $2.941 trillion, which makes it the most valuable company in the world.

The company’s fortunes are currently tied to its most important offering, iPhone. The device plays an important role in expanding the iOS ecosystem.

Although Apple’s business primarily revolves around its flagship iPhone, the Services portfolio has emerged as the company’s new cash cow accounting for 18.7% of the total revenues.

Apple’s endeavors to open up its ecosystem through partnerships with the likes of Samsung and Amazon are positive for the Services segment. This, in turn, will help in driving the top-line growth, thus reducing its dependency on just the iPhone.

Apple has outperformed its PC peers, Lenovo (LNVGY - Free Report) however underperformed than HP (HPQ - Free Report) on a year-to-date basis.

A better performing stock in the Computer-Mini Computer industry is 3D Systems (DDD - Free Report) .

Apple, which currently carries a Zacks Rank #3 (Hold), has appreciated 35.2% on a year-to-date basis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In contrast, Lenovo, HP and 3D Systems’ shares have returned 22.5%, 54.5% and 102.1%, respectively, year to date.


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