What happened
Shares of Apple (AAPL -1.02%) jumped on Tuesday, adding as much as 4.2%. As of 11:19 a.m. ET, the stock is up 3.9%.
The catalyst that sent shares higher was reports that shipments of the iPhone may be on the upswing, which would represent some much-needed good news for the tech giant.
So what
UBS analyst David Vogt estimates that shipments of iPhones in China have rebounded in May, increasing 16% from April levels, according to The Fly. This suggests that the COVID-19-related lockdowns and resulting supply chain problems may finally be abating.
This follows reports late last month that government officials in several of China's largest cities had eased pandemic-related restrictions, resulting in steady improvement in the country's manufacturing capability.
Vogt went further, estimating that overall shipments of the iPhone have increased by 13% year over year and an eye-popping 155% month over month, further evidence of recovery in both iPhone production and delivery. UBS maintained its estimate for iPhone shipments during the second calendar quarter at 42 million, but it said that updated data "increases our confidence that our June forecast could be conservative."
The analyst also said that Apple appears to have to have gained "material share" last month, prompting him to maintain his buy rating and $185 price target. This represents potential gains of 41% for investors, compared to Apple's closing price on Monday.
Now what
A number of China's largest population centers have struggled with outbreaks of COVID-19 in recent months, resulting in swift and severe government restrictions in order to contain the spread. Apple has had more than its fair share of challenges resulting from China's "zero-COVID" policy, which temporarily shuttered some of the company's biggest assembly facilities, adding to existing supply chain and logistics difficulties.
These reports suggest that Apple may have recovered from these most recent setbacks, welcome news for the company and its shareholders.
