The negative groupthink on Apple (NASDAQ:AAPL) is way overcooked, according to Wedbush Securities.
The research firm has a positive outlook on both the tech giant’s iPhone and services segments ahead of the company’s fourth-quarter earnings report on Thursday.
“The overall sentiment of Apple on the Street is a negative ‘groupthink mentality,’” analysts led by Dan Ives wrote in a note. That’s “very disconnected from the current iPhone 15 growth we see in the field based on our recent checks and trip to Asia that gives us a high level of confidence in owning Apple at these levels.”
Shares were down 0.3% in pre-market trading on Wednesday.
The average analyst estimates for revenue of $89B and earnings of $1.39 per share are “beatable” with Services growing and iPhone unit demand in the U.S. and Europe key.
“Mac and iPad remain weak and have tough comparables but that dynamic is known by the New York City cab driver at this point and does not move the needle on the stock in our opinion,” the analysts added.
Apple (AAPL) released its newest iteration of the iPhone in September and analysts have been reporting that demand appears to be weak. Chinese demand for iPhone units appears to have slowed as the post-pandemic economic recovery inches forward at a glacial pace.
“The elephant in the room this quarter is clearly China demand around iPhone 15 units which appears to have slowed the last month after coming out of the gates strong with pre-order activity,” Wedbush said.
“Cook will have a generally positive tone on the call around China iPhone demand for the December quarter despite massively negative Street sentiment building around the Cupertino story,” Ives et al said, divining the future.
Wedbush believes over 100M iPhones in China alone are “in the window of an upgrade opportunity and that remains the golden goose on this cycle for Apple with a very heavy mix of iPhone Pro this time.”
December quarter iPhone revenue will be up year-over-year and not down based on the current demand trend, the analysts said.
The bank maintained its Outperform rating on the stock with a $240 price target.