Wedbush still very happy with 'resilient' Apple in China

Tim Cook at a game tournament in Apple Taikoo Li, Chengdu

Rumors that have started to circulate about China banning the iPhone within its government offices and select businesses probably won't have much effect on Apple's bottom line. At least, if a note to investors from Wedbush seen by AppleInsider is to be believed.

"While there are lingering worries around iPhone shadow government bans in China for now this issue is very containable and has not dented demand for Cupertino in this key region based on our recent checks," writes Wedbush.

Believing Apple to be heading into a strong holiday season, Wedbush feels that iPhone 15 growth should exceed Street estimates for the December quarter thanks to strong upgrade activity in the U.S. and China, which are "resilient despite the bear noise."

Wedbush also claims not to have seen any "negative revisions" for iPhone units in its latest Asian supply chain checks that could affect the holiday and early 2024 sales. This speaks to "a very consistent consumer demand environment around iPhone 15 so far."

The unit checks puts Apple on a heading for between 220 million and 230 million units for the iPhone 15 for the full year of 2024, with upside anticipated in later quarters if the pace of upgrade activity continues.

The street "continues to underestimate the underlying upgrade opportunity in China," proposes the note, with estimates north of 100 million iPhones in the upgrade window "despite Huawei and geopolitical headwinds." That even takes into account the average selling price going up from around $825 to $850 of recent years to touching $925 now.

It is also believed that reports of moving more production out of China to India has "helped successfully tone down the negative undertones from Beijing seen in the September/October timeframe."

Services' return to steady double-digit growth and high iPhone unit sales goes against the "growth demise story" that Wedbush feels bear investors continue to push. That story is "a dynamic we have seen constantly over the past decade and this is just another chapter in that book."

With around 240 million iPhones in the upgrade window globally, Wedbush views this "as the golden opportunity to own Apple for the next year."

Wedbush maintains its Outperform rating and $250 price target it had updated earlier in December.