Analyst remains bullish on Apple as ‘it’s a lot more of headline risks’

An Apple store on Nanjing Road pedestrian street in Shanghai, China on December 16, 2022.

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One analyst maintains a bullish outlook Apple despite the tech giant’s shares falling to their lowest level since June 2021 amid continued iPhone supply concerns.

“Apple is the biggest name in the U.S. and we think it’s a lot more headline risk than anything else,” Angelo Zino, senior industry analyst at CFRA Research, told CNBC’s “Squawk Box Asia” on Wednesday.

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Headline risk is the risk that a company’s stock price will fall due to negative news coverage.

Apple shares fell to their lowest level since June 2021 as iPhone production is threatened by a widespread Covid outbreak in China after the country abandoned its zero-Covid policy.

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The outbreak could cause worker shortages at component plants or assembly plants across the country.

For the past two months, Apple has already been dealing with production shortages. In November, iPhone 14 production was affected by Covid-19 restrictions and labor protests at its main iPhone 14 Pro and iPhone 14 Pro Max assembly plant in Zhengzhou, China.

Last week, a JPMorgan Chase analyst said the supply shortfall should continue through the end of the year and weigh on the typical seasonal result in volumes. Apple had warned on November 6 of a “significant disruption” ahead of the holiday season.

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“While the rapid extension of iPhone 14 Pro/Pro Max delivery times has slowed and indeed started to moderate in recent weeks, it is still high relative to the lead times seen before the COVID outbreak in Zhengzhou,” Samik said. Chatterjee, in a note to investors.

“Ultimately, Apple will do everything it can to defend its business as long as it can in different geographic regions,” Zino said.

He further added that the actual impact on the top line will be less than 1% in the US and Europe.

Despite the shortage, many analysts predicted that Apple customers will remain loyal to the brand’s products.

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Apple and Microsoft held on despite headwinds in the technology sector, according to the analyst

“We think a lot of consumers are creatures of habit and won’t necessarily move away from what they’ve done historically in the Apple ecosystem,” Zino said.

In the interview, he also mentioned that Apple and Microsoft they held on despite the headwinds in the technology sector.

“When you look at the names that have held up the best, two of them are Apple and Microsoft and that makes a lot of sense,” Zino said.

“Because from a multiple perspective, they’re much more affordable than some of the other names out there and have the best free cash flow predictability.”


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