"Apple is struggling to overcome a combination of shutdowns and worker protests at a key production facility in Zhengzhou, China, that resulted in Apple negatively pre announcing on Nov. 6," EvercoreISI analyst Amit Daryanani wrote in a note on Tuesday.
Darayanani added: "Since then the situation in Zhengzhou appears to have somewhat improved but not back to normal. We think the site has been operating at ~60 70% utilization for nearly a month. To reflect the continued headwinds we are adjusting our [quarterly] estimates lower as iPhone demand could get affected by 5-8 million units (mostly at high-end) and negatively impact revenues by ~$5-8 billion in [the current quarter, which ends after December]."
The analyst maintained an Overweight (buy equivalent) rating on Apple stock.
Apple's stock rose slightly in the pre-market after an almost 3% drubbing on Monday.
"Protests in China against the lockdowns are growing, it’s entirely possible the situation gets worse and actually hurts end demand in China," Daryanani said. "So far, we think demand implications are minimal the bigger challenge is iPhone production."
China's COVID-19 cases are surging toward record highs just as the country was moving away from its Zero COVID policy. Violent protests erupted at the flagship plant of iPhone maker Foxconn last week, and have intensified across the country in recent days.
Daryanani isn't alone in his near-term concern on Apple's bottom line.
"It has been a gut punch at the worst time possible for Apple," Wedbush Managing Director Dan Ives said on Yahoo Finance Live. "We're talking shortages in a lot of Apple stores of upwards of 30% of iPhones in terms of the iPhone 14."
Ives estimated that Apple now has "significant" iPhone shortages that could wipe off 5% to 10% of units in the current quarter.