Here's what every major analyst had to say about Apple's big coronavirus warning

Published Tue, Feb 18 20206:50 AM ESTUpdated Tue, Feb 18 202010:12 AM EST

(This story is for CNBC PRO subscribers only.) Apple said there could be global iPhone supply shortages as the virus has resulted in the company keeping its China factories shuttered longer than anticipated alongside many store closings. The company had also previously given a wider range of guidance in its first-quarter earnings report in January due to the coronavirus uncertainty. The virus continues to cause uncertainty and havoc on various parts of the market with Apple being the latest company to warn shareholders about the consequences of the deadly illness. Shares of the company were down 2.34% in early trading. Here's what Apple analysts are saying about the company's revenue guidance announcement: "We believe any material weakness in AAPL shares as a result of the Mar-20 quarter revenue shortfall will prove to be a buying opportunity, as, in all likelihood, this is a temporary situation that will leave future quarters largely unaffected," Piper Sandler said. Apple surprised Wall Street by announcing it wouldn't meet its second-quarter revenue guidance due to the deadly coronavirus in China. Most analysts on Monday urged investors to remain calm and said it was a buying opportunity for clients. In addition, the firm said it believes this revenue warning could actually be beneficial to the company down the line. "In fact, the iPhone supply constraints in the current quarter could result in pent-up demand for future quarters," they said. Another firm said that while the announcement had forced it to lower its second-quarter iPhone estimates, it believed the disruption would be short-lived. "We view the coronavirus related weakness as transitory and it does not change our thesis on Apple," Bank of America analyst Wamsi Mohan said. "We reiterate Buy on large cash balance/optionality, expected new buyback authorization in April and upcoming 5G cycle," he said. The feeling was similar at JPMorgan. "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," they said. But another analyst said this was almost entirely predictable for anyone who was paying attention. "In some ways, the announcement is not entirely a surprise, given Apple's very high production exposure to China (70% of revs manufactured in the country) and sales into China," Bernstein analyst Toni Sacconaghi said. Still, the firm said Apple's announcement left it a little more uncertain. "It is hard to know whether AAPL's revenue shortfalls this quarter will ultimately be 'pushed out' to future quarters, or 'lost.' We suspect a bit of both." Barclays- Equal Weight rating, price target to $297 from $304 "Apple announced that March quarter results will fall below the previous guidance range. This is not surprising given the impacts of the Coronavirus, as we highlighted in our recent note. While this is likely to be viewed as a transitory event, we believe another China issue (after tariffs) highlights an inherent risk with Apple being too exposed to the supply chain in China." JPMorgan- Overweight rating "While we continue to remain bullish on the strong demand for 5G enabled iPhones expected to launch later this year for Apple (2020 product cycle), in conjunction with Apple's pre-announcement in relation to continuing challenges stemming from nCoV outbreak on both domestic demand and global supply, we are now moderating our near-term iPhone volume. ... 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. ... however, long-term outlook remains unchanged. Wells Fargo- Equal Weight rating "Apple is not quantifying the expected shortfall; only noting that weaker results reflect two main factors: 1) temporary constrained iPhone supply; manufacturing partners / locations outside of the Hubei province are ramping up more slowly than previously anticipated. 2) Product demand within China is being impacted; noting (as known) that all Apple stores and many of the company's partner stores have remained closed. Stores that are open are operating on reduced hours with very low customer traffic. Apple's press release notes that demand outside of China has been strong to date and in-line with expectations. Evercore ISI- Outperform rating "In aggregate demand for AAPL products will just shift from March-qtr to the out quarters (June & Sept) as it is unlikely that customers seeking AAPL product will go out and buy non-AAPL products. Net/net: We think the negative update to March-qtr is largely expected and given this is a more supply issue, it creates upside potential to June/Sept." Deutsche Bank- Hold rating "Overall, we are surprised that the announcement about a revenue shortfall came this early as AAPL is only ~50% into the quarter, and coronavirus was already contemplated to the tune of $500m-$1b in AAPL's revenue guidance in the form of a wider range. Unlike the Jan-19 pre-announcement, we believe that investors are likely to be more forgiving of this downward revision as much of it is outside of AAPL's control." Bank of America- Buy rating "We view the disruption to iPhone supply as temporary. We lower our iPhone estimates for F2Q to 44mn (from prior 50mn). Some of that demand may be made up in F3Q, or in F21. However, we conservatively just reduce F2Q units. We view the coronavirus related weakness as transitory and it does not change our thesis on Apple. We reiterate Buy on large cash balance/optionality, expected new buyback authorization in April and upcoming 5G cycle." Morgan Stanley- Overweight rating "We are buyers on weakness and fully expect Apple to take advantage of any pullback to repurchase more shares. As is evident in our largely unchanged FY20 and FY21 revenue and EPS estimates, we view the COVID-19 impact as a timing shift across a small number of quarters that shouldn't impact valuation, and our $368 PT is unchanged. We continue to believe the market underestimates the benefit of stabilizing iPhone replacement cycles which puts upward pressure on medium-term iPhone estimates." Goldman Sachs- Neutral rating "Apple stated that both production disruption and demand impacts are to blame for the reduced short-term sales expectations. The company did not provide a speciﬁc new revenue target. We assume that, as with every other company operating in China, the situation on the ground continues to evolve for Apple. We are reducing our forecasts for both the March and June quarters but we see this as a temporary issue for Apple." Citi- Buy rating "While we are lowering are March quarter sales by ~$8 billion and the respective EPS impact we believe much of this will be recouped in the June quarter and during 2H 2020. Furthermore we believe a pending 5G iPhone launch in September will help Apple get back on track to single digit iPhone unit growth coupled with incremental services and wearables sales to accelerate sales." Piper Sandler- Overweight rating "Apple announced that it does not expect to meet Mar-20 quarter revenue guidance due to the ongoing impact of the Coronavirus. Specifically, the company pointed to an impact on global iPhone supply and lower demand for Apple products in China. We are lowering our estimates for the Mar-20 quarter, but leaving estimates for all other future periods unchanged. We believe any material weakness in AAPL shares as a result of the Mar-20 quarter revenue shortfall will prove to be a buying opportunity, as, in all likelihood, this is a temporary situation that will leave future quarters largely unaffected." Bernstein- Market Perform rating "In some ways, the announcement is not entirely a surprise, given Apple's very high production exposure to China (~70% of revs manufactured in the country) and sales into China. That said, the company stated as recently as three weeks ago that it felt it could manage the issue, building in a ~$2B revenue cushion (~3%) to its guidance to account for the impact. ... It is hard to know whether AAPL's revenue shortfalls this quarter will ultimately be 'pushed out' to future quarters, or 'lost'.We suspect a bit of both."

Apple CEO Tim Cook attends the China Development Forum in Beijing, China March 23, 2019.

Thomas Peter | Reuters

(This story is for subscribers only.)

Apple said there could be global iPhone supply shortages as the virus has resulted in the company keeping its China factories shuttered longer than anticipated alongside many store closings. The company had also previously given a wider range of guidance in its first-quarter earnings report in January due to the coronavirus uncertainty.

The virus continues to cause uncertainty and havoc on various parts of the market with Apple being the latest company to warn shareholders about the consequences of the deadly illness.

Shares of the company were down 2.34% in early trading.

Here's what Apple analysts are saying about the company's revenue guidance announcement: