02:36 PM EDT, 04/09/2024 (MT Newswires) -- Apple's ( AAPL ) iPhone unit sales in China are tracking moderately lower on a year-over-year basis for the March quarter as the company navigates one of the most difficult demand environments seen over the last five years in the key region, Wedbush Securities said on Tuesday.

Sluggish sales in China remain "a major growth drag on the overall growth story for Apple ( AAPL ) in the near term," a group of Wedbush analysts including Daniel Ives said in a note to clients.

"Huawei share gains, geopolitical tensions (shadow government ban in some Chinese agencies), and a softer China economy has created a difficult selling environment for Apple ( AAPL ) in China again this quarter," the analysts wrote.

The brokerage, however, reiterated an outperform rating and a $250 price target on the stock, maintaining its "bullish stance" on the company.

The optimism reflects findings from a Wedbush trip to Asia earlier this month, where supply checks indicated that Apple ( AAPL ) iPhone builds have held steady with initial projections from the beginning of 2024. Roughly 20% of iPhones sales come from China, the report showed.

"While not a positive result per se, we believe this result is better than had been feared in light of concerns share loss in China will heavily weigh on Apple ( AAPL ) results/units," Ives said.

China has "clearly performed below expectations," but other regions, including the US, Europe, and India, have been "relatively strong" and may help to balance out the China softness in the March quarter, he said.

Wall Street is bracing for a brutal March quarter and a soft June guidance, according Wedbush. Heading into an artificial intelligence announcement at Apple's ( AAPL ) Worldwide Developers Conference in June and a strong upgrade cycle for the iPhone 16, Apple ( AAPL ) may start to see a "renaissance of growth" heading into the September quarter, according to Ives.

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