Wedbush: iPhone factory's COVID issues not a reason to sell Apple stock

A Foxconn facility

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Despite COVID-related supply chain issues and Apple warning of lower shipments of the iPhone 14 Pro, Wedbush insists that investors should maintain their holding in Apple.

Since mid-October, Apple has had to deal with problems at a Foxconn factory in Zhengzhou, China, caused by a COVID outbreak and strict government restrictions impacting its operation. Apple also issued a rare update on Sunday, acknowledging the lower production of the iPhone 14 Pro models.

On Monday, Wedbush analysts Daniel Ives and John Katsingris offered their own hot take on the affair, warning wavering investors against selling their shares in the face of temporary adversity.

Noting the "chaos" seen in China surrounding the factory, including workers leaving over conditions and restrictions, the Wedbush note seen by AppleInsider states that the situation "is an absolute gut punch for Apple in its most important holiday quarter."

While demand remains high and firm going into the holiday season, Wedbush estimates the supply issues could negatively impact iPhone sales by just 3%. "If Zhengzhou remains at lower capacity the next few weeks, this would cause clear iPhone Pro shortages into the all-important Christmas time period especially in the U.S.," the note explains.

This isn't "the news any bull wants to hear from Apple," but Wedbush adds that while it's a supply issue and related to China's zero COVID policy which is "a very frustrating situation," it's not a demand-driven problem. There is strong demand, it's just that events have led to Apple not being able to keep up as much as it wants to.

Referring to the situation as an "ongoing albatross for Apple," Wedbush is still offering a "positive thesis on the demand story during this economic dark storm." Indeed, the analysts say they "would be buyers on any knee-jerk weakness this morning as the Street digests this news."

Concluding the note, Wedbush continues to maintain its "Outperform" rating for Apple, and continues its 12-month price target of $200.