Competition between Apple and the Chinese consumer electronics manufacturer Huawei has continued to heat up, but one Evercore analyst says investors in the iPhone maker shouldn't worry.
China accounted for $72.6 billion of Apple's total $383.3 billion in revenue in fiscal 2023. But government restrictions on the iPhone and an uncertain economic environment have created challenges for the company.
On top of this, Apple is facing a competitive threat in China from Huawei, which makes smartphones at lower price points. That competition heated up for Singles Day, an annual shopping event in which various retailers offer special deals.
According to Counterpoint Research, Huawei achieved high sales growth during the event, which is always held Nov. 11, while unit sales of Apple products declined from a year earlier. Apple didn't immediately respond to a request for comment.
"The report has added to investor concerns around Huawei risk, but we continue to think this risk is overstated," Evercore ISI analyst Amit Daryanani wrote in a research note Monday. Daryanani rates Apple at Outperform with a target of $210 for the stock price.
Daryanani said that Huawei's stronger performance during the Singles Day sales event was partially due to the fact that the Chinese phone maker offered more aggressive price cuts than Apple. Apple also continues to face constraints on the supply of its phones. Daryanani believes the decline in unit sales was "more a function of limited supply vs. any meaningful share loss."
"Looking at unit numbers, Apple has only 15% share in China in the most recent quarter, but they earned 37% of market revenue," Daryanani added. And while Huawei offers lower-end smartphones, Apple concentrates on the higher end of the market.
"These buyers tend to be less price sensitive and more loyal, so we continue to think Apple can maintain its share despite Huawei becoming more competitive," the analyst said.
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