Worst is over for Apple iPhone sales, analyst Ming-Chi Kuo says

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Tim Cook, CEO of Apple speaks while unveiling new products during a launch event on October 30, 2018 in New York City.

The worst could be over for the iPhone, according to top Apple analyst Ming-Chi Kuo.

The analyst with TF International Securities — among the first to point to shrinking handset sales — now sees “limited downside risks for Apple and iPhone suppliers’ share prices,” Kuo wrote in a note to shareholders. iPhone shipments for Apple’s fiscal second quarter will beat market consensus, Kuo predicts.

Kuo has an excellent track record when it comes to predicting future Apple products and is keyed into chatter from the company’s suppliers.

Apple and its stock have been plagued by reports of reduced supplier orders and weak sales. Insiders and analysts have called out what some saw as the death of the iPhone, and hypothesized around Apple’s next big product win. Earlier this month, CEO Tim Cook issued a rare revenue warning for the company’s fiscal first quarter results, which it reports Tuesday.

Shares of Apple made up enough ground last week to erase the losses that resulted from the guidance announcement. The stock is still down more than 30 percent from its all-time highs in October.

Apple could still see a year-over-year decline in iPhone shipments over the next several quarters, Kuo predicts, but the severity of the declines will ease.

Kuo is forecasting first-quarter iPhone shipments between 36 million and 38 million, factoring in weaker-than-expected demand from China and positive sales bumps in non-Chinese markets from trade-in programs and price cuts. However, Apple announced last fall that it will no longer report iPhone unit sales, so we will never get the exact number.

“If Apple continues the trade-in programs and the US-China trade war does not worsen further, we expect 2H19 iPhone shipments will be generally flat YoY thanks to replacement demand, trade-in programs and market share gain in European markets,” Kuo said.

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