Apple (NASDAQ:AAPL) is well-positioned heading into the release of its third-quarter earnings later this week, analysts at Pipe Sandler said on Monday, arguing that concerns around weak demand for the tech giant‘s handsets in China are “a bit overblown.”
In a note to clients, the analysts said that Apple has a “solid footing” in China despite lingering worries that a sputtering post-pandemic recovery in the country will weigh on sales of the California company’s watches, earphones, Mac computers. Sales in China of Apple’s popular iPhone handset in particular should see a “small if any decline” but still remain in line with internal estimates, the analysts predicted.
Meanwhile, they added that “dynamics around potential soft conditions in China will most likely be built into the guide for the September quarter.”
Even accounting for potentially weaker returns in China, the analysts said that Apple’s projections for September will “match or slightly exceed [Wall Street] expectations” thanks in part to strong demand for the iPhone in India.
Apple will unveil its latest results on Thursday. Analysts have flagged that recent weakness in consumer demand for nondiscretionary items may hit product sales, although Apple’s increasingly important services business — which features offerings like music, movies and iCloud storage — is seen supporting margins.