Here's a bullish report on Apple's first-week iPhone 8 sales (AAPL)

Tim Cook

One big question for investors in Apple and its suppliers is whether the new iPhone 8 models are selling well or if Apple fans and customers are holding out for the high-end iPhone X, which launches in November.

Short lines at Apple stores and other retailers last week suggested that the iPhone 8 launch may have been a dud.

But one highly respected analyst is telling investors to relax. KGI Securities analyst Ming-Chi Kuo wrote on Wednesday in a research note seen by Business Insider that iPhone 8 first-weekend sales were "stable, not weak" and that the "market may be excessively negative on iPhone 8 first-weekend sales."

KGI Securities believes that Apple's Asian factories are building about the same amount of iPhone 8 and the more expensive iPhone 8 Plus, for a total of 16-18 million iPhone 8 and iPhone 8 Plus this quarter.

The report relies on data from Localytics to suggest that the more-expensive iPhone 8 Plus is slightly more popular so far.

Kuo writes that most analysts tend to look for signals from retailers for first-weekend sales, like the famous camp-outs outside the Apple store. But those sales are typically for unlocked devices, not the iPhones sold on installment plans by carriers and other retailers.

"While we acknowledge that queues outside SIM-free channels have been much shorter than after previous iPhone launches, we see stable first-weekend demand for the iPhone 8/ 8 Plus in carrier channels. Most of those camping outside unlocked-device outlets are presumably hardcore Apple fans and heavy users, whose plan this year is to gear up for the iPhone X," the note said.

KGI's "Apple Insight" notes are targeted at investors in companies that count Apple as a customer — companies like Foxconn parent Hon Hai, which assembles iPhones, as well as companies that manufacture the complicated components that go into them.

Kuo's takeaway from early iPhone 8 sales? "Apple supply chain shares have corrected because the market is excessively negative on iPhone 8/ 8 Plus first-weekend sales," he writes, and recommends investing in companies such as Hon Hai, Largan and Chungwa Precision in Taiwan.

But, he warns, his findings don't "imply iPhone 8/ 8 Plus shipment momentum will remain stable. We believe this needs to be monitored closely going forwards."

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