Recent reports about reduced orders for iPhone 5 components have cause confusion among investors, but one analyst says demand for Apple’s flagship handset “remains robust.”
Analyst Shaw Wu with Sterne Agee revealed in a note to investors on Tuesday that his checks with suppliers indicate that demand for the iPhone 5 “remains robust.” He’s not concerned by recent reports that interpreted iPhone 5 order cuts as a sign of weak demand.
Wu chimes in along with a growing group of market observers who believe that any order cuts Apple has made for iPhone 5 components are not an indicator of consumer interest waning in the device.
The analyst believes that reduced component orders are the result of improved yields, so Apple has been able to place fewer orders for components. He also says supplier shift changes made by Apple have contributed to the reductions.
With all of the intense focus on Apple’s future, Shaw thinks Apple’s guidance for its March quarter will the the ”trickiest” that he can recall.
He expects Apple’s traditional “vintage conservative” guidance, but says this time some investors may view such guidance as a sign of weak demand.
Wu expects Apple’s sales of the iPhone, and it’s gross margins for the recently concluded December quarter, will likely surprise investors to the upside. He calls for sales of 47.5 million iPhones, above market consensus of 46 million to 47 million, with gross margin of 38.7%, vs. expectations of 38.3 percent.
Sterne Agee is still giving a “buy” recommendation for investors, and has a price target of $840 for AAPL stock.
Apple will report its earnings on Wednesday, January 23rd.