Apple downgraded over ‘dramatically’ slowing iPhone X demand
“Soft iPhone sell-through suggests a saturated market and the lack of gross margin upside reduces our view of potential profit growth,” KeyBanc Capital Markets analyst Andy Hargreaves wrote in a note to clients, according to CNBC.
“This reduces our view of potential upside in the stock and prompts the downgrade,” he said, adding that the stock's “fair value” is $178 per share.
Bernstein, which is Wall Street's premier sell-side research and brokerage firm, has also reduced its rating for Apple shares to market perform from outperform.
“Relative to expectations, the cycle is weak, and total iPhones sold are likely to be flat for the third straight year,” said analyst Toni Sacconaghi. “We fear that unit growth could potentially decline by more than what we have seen over the last two years, largely due to the fact that iPhone X demand, in particular, appeared to slow dramatically since December.”
The analyst reduced his price target for Apple shares to $170 from $195. The company’s shares were up 0.3 percent in Friday’s premarket session, at $168.25.
Apple reported quarterly earnings on Thursday that beat expectations, while revenue which also topped estimates. However, the number of iPhone units sold fell from a year ago, despite expectations of modest growth, to 78 million iPhones.
In an attempt to calm investor fears, Apple shareholder Ross Gerber said the company sold a “perfectly fine” number of phones during the quarter, but earnings were a bit less than he was hoping for.
Apple has set a lower-than-expected revenue forecast for the current quarter of up to $62 billion, below the $65.73 billion that Wall Street was looking for.
For more stories on economy & finance visit RT's business section