AAPL hit in wake of iPhone 14 production report is overblown, say analysts

Apple stock fell after news broke that Apple is keeping its original goal for iPhone 14 production, but two notable analyst firms aren't worried.

In two notes to investors seen by AppleInsider, analysts from Morgan Stanley and Wedbush say that a recent report about iPhone 14 family production shouldn't worry investors. The report on Wednesday said that Apple is slightly scaling back production of the iPhone 14, keeping its target of 90 million devices for the second half of 2022.

The move is reportedly a drop of six million units from Apple's original estimates. If accurate, this brings iPhone 14 production in line with the iPhone 13 range during the same period — which was strong.

Daniel Ives and John Katsingris from Wedbush highlight the strong demand for the iPhone 14 Pro models. The mix for Pro versus non-Pro models is said to be shifting to 85% to 90% for iPhone 14, compared to the iPhone 13 Pro mix of around 60% to 65% at this point in the cycle.

"Our positive thesis on Apple remains unchanged and we are not wavering in our view the iPhone 14 Pro demand is robust and this will enable Apple to power through near-term macro headwinds much better than feared by the Street," the Wedbush note says. "The softness on the base iPhone model is a clear sign that in this weaker macro consumers are not paying up for a smartphone that is pricey with minimal enhancements from iPhone 13 with the Pro model a complete other story seeing positive demand."

Morgan Stanley followed with their own note, which AppleInsider has also seen. They say that the build estimates for the iPhone 14 are in-line with their predictions for production.

Both notes discuss the order wait-times that customers are facing for the Pro models, as well as the heavy focus for early consumers on the iPhone 14 Pro lineup, versus the iPhone 14 and the iPhone 14 Pro which is not yet shipping.

Wait times for the iPhone 14 Pro line have shifted into November, and Apple suppliers such as Foxconn are moving production from the iPhone 14 to the iPhone 14 Pro models to keep up with demand.

Analysis from investment bank Morgan Stanley showed the iPhone 14 Pro had the longest lead time of any model released in the last six years at similar times after debut, at 36.5 days. The iPhone 14 Pro was on par with iPhone 13 Pro models at 29.5 days.

JP Morgan recently shared data saying iPhone 14 Pro has an average delivery time of 35 days, and the Pro Max is at 41 days.

Wedbush maintains its Apple price target of $220 that it raised in August 2022. This target is based on a 19x multiple for Services at $1.6 trillion and a 7x multiple for Hardware at $2.1 trillion.