Apple stock (AAPL) fell more than 6% earlier this week after Chinese officials told employees at central government agencies to not use iPhones at work. A new high-end phone release from China's Huawei also added pressure on Apple and came just days before the company releases its new iPhone 15.

But Morgan Stanley analyst Erik Woodring wrote Friday these headlines are "more bark than bite," even with China representing about 20% of Apple's revenue in its most recent quarter.

"We believe Apple's 2-day -6% stock move suggests the market thinks recent China headlines will evolve into something broader," Woodring wrote Friday. "We believe that's unlikely ... The stock move is overdone."

Even in a worst-case scenario, Morgan Stanley believes Apple would lose about 4% of revenue and 3% of earnings per share. The stock move earlier this week implied Apple would lose 70% of its iPhone shipments to China, a "highly draconian and unlikely scenario," per Morgan Stanley.

Apple shares were up more than 1% on Friday.

Apple has been gaining ground in China over the last several years.

Analysis from JPMorgan shows Apple doubled its market share from 2019 through the first quarter of 2023 to capture about 20% of China's market.

And that growth could be at risk, according to JPMorgan analyst Samik Chatterjee.

"We do not expect the restriction imposed on ownership of iPhones by government employees to have a material impact on the volume outlook as previous restrictions to a similar nature have shown limited evidence of changing consumer purchasing behavior," Chatterjee wrote.

"That said, the restrictions are coinciding with the recent launch of Huawei Mate 60 Pro (e.g., Huawei’s 5G smartphone), and the restrictions will make it tougher for Apple to continue to deliver share gains in the local market."

Chatterjee also noted that the potential headwinds in China come at a crucial time for Apple.

The stock touched all-time highs over the summer, sparking conversation about if shares were overvalued. Then, the tech giant missed Wall Street's expectations for iPhone sales and reported its third straight quarter of revenue declines in early August.

"We believe share price outperformance in the remainder of the year (particularly after a strong outperformance in 1H and underperformance between July and September) is dependent on beating what are now low investor expectations for the iPhone 15 launch," Chatterjee wrote.

Apple's marquee fall event is slated for next Tuesday with the launch of the iPhone 15 expected to be the headliner. Traditionally, Apple's stock hasn't performed well the month after an iPhone launch, with September also marking the stock market's weakest month of the year.

And while analysts note there aren't many "material" upgrades expected for the iPhone 15, Apple could benefit from users upgrading their existing iPhone.

JPMorgan estimates Apple will sell 218 million iPhones from September through the end of the year, about six million short of last year's total.

"Historically, the iPhone launch has been a sell-the-news event," Morgan Stanley's Woodring wrote.

"While we don't expect the day-of stock reaction to the September 12th Wonderlust event to be any different this year, we continue to believe that FY24 iPhone expectations are too low and that the iPhone 15 cycle is not as 'iterative' as anticipated, with the potential for both unit and [average selling price] growth."

Josh Schafer is a reporter for Yahoo Finance.

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