Analysts believe that Apple’s core strengths will be enough to withstand the impact of the coronavirus in the long term despite the company’s warning on Monday that it will fall short of revenue guidance in Q2.
Apple shares slumped 3.5% after the company announced that it would miss the $63-$67bn revenue range it set in January due to the ongoing production and distribution issues caused by the outbreak of the virus in China.
The news caused panic among investors, who are now expecting the fallout to hit major tech companies and economies around the world during the next six months.
Analysts eased some of those fears in midweek after claiming that Apple has the fundamentals in place to shake off any issues, which bodes well for the medium to long-term outlook.
Wedbush said that there does not appear to be an extended supply or demand issue for iPhones and forecasts a recovery in June ahead of the “5G super cycle”.
JP Morgan stated: “We expect most long-term investors in Apple shares to look past these temporary headwinds, with both products and services continuing to demonstrate strong underlying consumer demand.”
While analysts remain bullish on Apple’s prospects, there is likely to be a dip in sales in Q2 and possibly Q3.
Apple had said on Monday that while work had resumed in China, the gradual return to normal conditions will prevent it from meeting guidance for the March quarter.
The Cupertino-based company’s recent pivot to services is well-timed though as that could help to pick up some of the slack in the coming months.
Canaccord Genuity believes that the “diversified mix” of product and service revenues will prevent Apple’s stock from cratering in the near term.
Back in January, Apple posted $12.7bn quarterly revenue for its services division, which was a 17% increase from the year before.