Published - March 08, 2023 @ 4:55 AM (EET)

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According to Wedbush analyst Dan Ives, demand for Apple iPhones has returned in China following a weak December. 

The longtime Apple (NASDAQ:AAPL) bull increased his price target on Apple stock from $180 to $190 and maintained his Outperform rating, noting Beijing rolling back the country's strict zero-Covid-19 lockdown policy earlier that month.

In an investor note Wednesday, Ives wrote,

"The months of January and February and early indications around March are steady on the iPhone front for Cupertino globally, which is a stark contrast to what we saw in the supply-constrained December."

Ives also reminded investors that roughly 25% of iPhone owners hadn't upgraded their iPhones in over four years.

"With the highly anticipated anniversary edition iPhone 15 set to be launched in the September timeframe, the baton handoff from iPhone 14 to iPhone 15 looks to be a steadier transition than some other peak-to-valley iPhone cycles of the past," he said.

WHY IT MATTERS

iPhone sales are vital for Apple, with the segment having earned 52% of the company's total revenue in 2022, generating $205.4 billion and rising 7% year over year. In the December quarter, Apple stuttered, reporting its first revenue decline in about three-in-a-half years as sales of its flagship iPhone fell year-over-year.

In the company's latest earnings call in February, Chief Executive Tim Cook said, "we had significantly less iPhone 14 Pro and iPhone 14 Pro Max supply than we planned, causing ship times to extend far beyond what we had anticipated." 

However, Apple could witness an acceleration in its Services business next year. This week, Goldman Sachs issued Apple a "Buy" rating for the first time in roughly six years, advising investors to focus on the company's installed user base and recurring revenue growth from the Services business rather than on revenue headwinds.

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Analysts expect the Service business alone to be worth $1.2 trillion-$1.3 trillion.

Meanwhile, Apple returned to a frequent trick on Tuesday, keeping buyers interested in its current iPhone line until the new model arrives by adding a new color. Adding to the existing midnight, blue, purple, red, and starlight options, the company announced a yellow version of the iPhone 14 and 14 Plus.