Analyst: Singles Day Boosts iPhone XR Sales, But Downside Pressure Remains After Holiday

Rosenblatt Securities highlighted increased evidence of competition from Huawei and the implications for Apple Inc. (NASDAQ: AAPL)’s unit sales and sell-through rates in a Wednesday report. 

The Analyst

Analyst Jun Zhang reiterated a Neutral rating on Apple with a $200 price target.

The Thesis

China’s “11:11 holiday” — or Singles Day — featured several discounts on the iPhone XR, Zhang said in the note. (See his track record here.) 

Rosenblatt reseach shows that iPhone XR unit sales reached the level of iPhone Max unit sales after one month and surpassed XS unit sales in China, the analyst said. 

“The improvement in iPhone XR sell-through rates is encouraging. Despite this improvement, we continue to believe iPhone XR production may still face some downside risk after the holiday season, as we believe current iPhone XR production is still above sell-through rates.”

Despite encouraging rates, Apple faces immediate competition from Huawei, Zhang said. “Huawei’s Mate 20 has sold very well in China, while its Mate 20 Pro has sold out. We believe Mate 20 Pro sales have grown 20-25-percent year-over-year compared to Mate 10 sales, even with panel quality issues from LG Display impacting its shipment schedule.”

Over the past two years, many high-end customers have transitioned from both Samsung Electronics Co. (OTC: SSNLF) and Apple to Huawei smartphones, Zhang said. 

Huawei's smartphone growth is a positive for Lumentum Holdings Inc (NASDAQ: LITE), Viavi Solutions Inc (NASDAQ: VIAV) and Sony Corp (NYSE: SNE), Zhang said. 

"Because Huawei’s Mate 20 CMOS content dollars are much higher than the iPhone Max, we believe this could offset weakness at Apple for Sony.”

The Price Action

Apple shares were up 0.55 percent at $177.95 at the time of publication Wednesday. 

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Photo courtesy of Huawei.