Apple shares can't keep up with the market. Suspicions about the iPhone may be the cause.

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Investors are a little concerned about the outlook

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iPhone sales.

Apple (stock ticker: AAPL) generates more than half of its revenue from smartphones, not counting the billions of dollars brought in by the App Store and the growing suite of iPhone-based services. For now, there are concerns that the combination of Covid-related manufacturing shutdowns in China, component shortages, and signs of a downturn in the consumer economy are putting current street expectations for the iPhone at risk.

Apple shares were excluded from Wednesday’s modest rally in technology stocks. It is one of a handful of big-cap technology stocks that are trading in the red. Apple’s stock closed 0.1% higher at 140.52, while Apple’s stock closed down

Nasdaq Composite
It rose 1.5%. The stock is down about 21% so far this year.

One reason for Wednesday’s poor performance is the Nikkei Asia story that says Apple’s development schedule for the iPhone 14, expected to arrive this fall, has been hampered by the shutdown in Shanghai regarding China’s zero-Covid policy. When announcing its March quarter results, Apple warned that revenue in the June quarter could reach between $4 billion and $8 billion due to supply issues related to Shanghai.

The Nikkei article, citing “multiple sources with direct knowledge of the matter,” says the worst case scenario could be a delay in the manufacture of new phones.

Apple has a consistent policy not to discuss undisclosed products and production plans. It did not immediately respond to a request for comment.

Meanwhile, Loop Capital analyst Ananda Baruah believes Apple may scale back its iPhone production plans this weekend. In a research note, he said Wall Street’s estimate of iPhone sales in the June quarter could be as high as 4 million to 6 million units and that he believes estimates of the number sold in the March quarter exceeded the true figure by 5 million. .

Apple doesn’t disclose iPhone unit sales, so there’s no way to know the actual number.

Baroah believes iPhone revenue for the June quarter could be at risk, but he also said the consensus forecast for the September and December quarters could be too low. This is a reflection of his view that the street underestimates the average selling price of the iPhone, as consumers choose higher-end models with more memory capacity over cheaper ones.

For the June quarter, Baroah sees Apple selling 41 million units at an average price of $920. He wrote that the consensus call on Wall Street is 47 million units with an average price of $834.

For the entire 2022 calendar, expect Apple to sell 229 million phones at an average price of $927, while peers see, on average, 242 million units for an average of $852. Baroah’s call cuts $212 billion in revenue, above the Wall Street consensus of $212 billion.

Baruah maintained the buy rating on the stock with a target price of $180.

Write to Eric J. Savitz at eric.savitz@barrons.com