Sterne Agee analyst Shaw Wu has released his supply chain update for the Apple Inc. (NASDAQ: AAPL) iPhone 5 after concerns with its new Maps app. His take is that it seems demand has continued to be as robust as ever, and he said that demand is unfazed.
Mr. Wu said:
Despite well-publicized concerns with its new Maps app, we have not picked up changes in supply chain build plans. Demand appears robust with its online store quoting a lead time of 3-4 weeks. In addition, we are seeing improving yields on in-cell touchscreens meaning it is becoming less of a constraint. Instead, what appears to be limiting production is assembly of the iPhone 5 itself as it is not easy to build. We view these as short-term issues and continue to see a powerful product cycle.
There were other positive issues as well. Wu talked up improving yields and wider component availability. Despite the bottleneck being the construction of the phone itself, Wu sees 27 million iPhones in the September quarter and 46.5 million units through December … with room for upside. Wu also sees the maps situation getting better.
Stern Agee has maintained a Buy rating with an $840 price target, based on a 12-times 2013 earnings plus the net cash of the company.
JON C. OGG