“UBS Analysts Report Weakened Demand for Apple’s iPhone in March, Risks for H2”

Demand for Apple’s (NASDAQ:) iPhone “significantly weakened” in March, UBS analysts said on Monday.

Analysts, who have a buy rating and a price target of $180 on AAPL stock, told clients in a note that iPhone sales fell nearly 4% in March, though they have noticed that growth in China has accelerated.

“iPhone sales in the month of March fell nearly 4% year-on-year to ~17 million units,” the analysts wrote. “In the United States, Apple’s largest market, iPhone sales were just 4.5 million units, down ~8% year-on-year from 6-year growth. 6% in Feb. The 4.5 million units sold in the U.S. in March were the lowest since September 2020, consistent with our audits and recently reported weak upgrade rates at AT&T (NYSE: ), Verizon (NYSE:) and T-Mobile (NASDAQ:).”

“While the US was weak, Chinese units were up 6.7% year-on-year to 3.8 million, a 200 basis point acceleration from February but only partially offsetting the decline in the U.S. Sales in Europe remain weak at 2.9 million units, down about 22% year-on-year, a modest improvement from February’s 23% decline despite a sharper comparison easy by 360 basis points,” the analysts added.

Partly due to the company’s analysis of slowing demand, analysts said they estimate Q1 23 iPhone builds were around 51 million (down 13% in year-on-year and 30% quarter-on-quarter). Additionally, UBS forecasts iPhone builds of 206.8 million for CY23, which is 10% lower than the 230 million builds for the years 2021 and 2022 “given the relatively weaker sales trends in the United States and continued weakness in Europe”.

Analysts also commented that there is no change in their estimates for the iPhone, but the March data suggests a risk for the second half.

“We are not changing our iPhone unit and revenue estimates for the March quarter of 54.0 million / $47.9 billion respectively (Consensus 55.6 million / $49.0 billion) at the following sales data,” they said. “While the March quarter data is retrospective and reflected in our estimates, weakening MoM trends in the US raise additional risks to iPhone demand in Apple’s S2 (June and September).”