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The analysts, who have a Buy rating and $180 price target on AAPL shares, told clients in a note that iPhone sell-through declined by almost 4% in March, although they remarked that growth in China accelerated.
“iPhone sell-through in the month of March was down almost 4% YoY to ~17 million units,” the analysts wrote. “In the U.S., Apple’s largest market, iPhone sell-through was just 4.5 million units, down ~8% YoY vs 6.6% growth in February. The 4.5 million units sold in the U.S. during March was the fewest since Sept-2020, consistent with our checks and recently reported soft upgrade rates at AT&T (NYSE:T), Verizon (NYSE:VZ), and T-Mobile (NASDAQ:TMUS).”
“While the U.S. was soft, China units increased 6.7% YoY to 3.8 million, a 200 bps acceleration from February but only partially offset the decline in the U.S.. Europe sell-through remains soft at 2.9 million units, down ~22% YoY, a modest improvement relative to February’s 23% decline despite a 360 bps easier comp,” the analysts added.
In part due to the firm’s analysis of softer demand, the analysts said they estimate 1Q:23 iPhone builds came in at roughly 51 million (down 13% YoY and 30% QoQ). In addition, UBS forecasts iPhone builds of 206.8 million in CY23, 10% below the 230 million builds in calendar 2021 and 2022 “given the relatively softer sell-through trends in the U.S. and persistent softness in Europe.”
The analysts also commented that there is no change to their iPhone estimates, but March data suggests an H2 risk.
“We are not changing our March qtr iPhone unit/revenue est. of 54.0M / $47.9B respectively (Consensus 55.6M / $49.0B) following the sell-through data,” they stated. “While the March qtr data is backward-looking and is reflected in our ests, softening MoM trends in the U.S. raise incremental risks for iPhone demand in Apple’s H2 (June & Sept).”
Apple shares, which are up over 30% in 2023, were trading 0.3% lower premarket on Monday.
