Investors fear that Apple (NASDAQ: AAPL) stock price rally could be halted by lower revenue and earnings guidance for the March quarter. The largest tech company says they are seeing stronger than expected impact of coronavirus attack on financial numbers. The company has extensive penetration in Chinese markets; it has also established several manufacturing facilities in China.
It’s both demand and supply has been impacted by the suspension of business activities in the past few weeks. AAPL share price rallied at a sharp pace in the past six months on the back of strong growth trends across all segments.
Apple Forecasts Lower Revenue Due to Two Reasons
Apple announced that they anticipating lower revenue for the second quarter this year amid coronavirus attack. The company presented two main reasons for lower than expected results. The first is that its iPhone supply is likely to decline due to the closure of factories along with suppliers’ constraints. The lower supply will impact its sales and revenues worldwide.
Secondly, the demand for its products is likely to decline substantially within China. The company has closed all of its stores in China. The company says they are gradually reopening stores in China according to the recommendations of public health experts. On the positive side, the company claims that its sales outside China have been strong for all of its products and services.
Analysts See Limited Impact on Apple Stock Price
Although several analysts and investors are showing concerns over slower revenue growth due to problems in China, some market pundits are optimistic about the bull-run. For instance, Wedbush sets a price target of $400 with an Outperform rating. “The temporary closure of more than 40 stores in China is having a negligible impact thus far despite the scary and concerning headlines from the region. The closure impact is a very containable risk,” the firm said. Apple had generated $13bn in quarterly revenue from China in the latest quarter.