By Yasin Ebrahim
Investing.com – Apple (NASDAQ:AAPL) was caught up in the intense selloff Monday, as many fret the impact of the coronavirus on Chinese New Year sales, but one analyst sees reason for optimism ahead of the iPhone maker's earnings due Tuesday.
China made up about 17% of Apple's total revenue last year, and the spread of the coronavirus has raised worries over the consumer impact on the highly anticipated Chinese New Year, Wedbush said.
Apple (NASDAQ:AAPL) fell 2%, but Wedbush said it would be buyers of the stock on weakness and reiterated its outperform rating and $400 price target.
The bulk of Apple sales in China and the surrounding countries has already taken place in the lead up to the holiday with a "strong December and January likely already in the books with sales up markedly year over year and thus have helped drive a strong China region for Apple (NASDAQ:AAPL)," Wedbush added.
With as many as 48 cities in China reportedly on lockdown, transportation and foot traffic is limited in major cities, including Shanghai and Beijing. This would result in just 1 million iPhones, less than 3% of Chinese annual iPhone sales at most, in the region shifting out of the March quarter into the June quarter, Wedbush estimated.
The fundamental impact from this virus to Apple’s top line is "negligible," according to Wedbush, as the tech company decided against cutting prices this year or introducing last-minute sales around the Chinese New Year, which had be seen in prior years to boost sales.
Apple is up about 5% for the year so far and reports fiscal first-quarter earnings on Tuesday after the closing bell.