Apple Inc. (NASDAQ:AAPL) received another downgrade from analysts at Mizuho Securities USA Inc. The Cupertino based iPhone maker was downgraded four times in less than 24 hours, which clearly shows that analysts have an overall negative outlook on the company.
Mizuho analyst, Abhey Lamba told investors that based on their supply chain check in Asia, Apple Inc. (NASDAQ:AAPL) is planning to reduce its iPhone shipments for the March quarter. According to her, the current estimates show that the company’s revenue will decrease by 10 percent as the volume of the iPhone is set to decrease around 40 million to 45 million units next quarter.
Lamba pointed out, “We believe these forecasts will trend to below 40M iPhones, creating a revenue and EPS risk of ~$3B and $1.00, respectively, for F2Q13 while there remains similar upside to December estimates.”
According to Lamba, iPad Mini will continue to cannibalize the higher end versions of the iPad, which would result to lower ASPs. Apple Inc. (NASDAQ:AAPL) is expected to report total sales of 20 million to 22 million units of iPads in the December quarter, which would result in a revenue and EPS headwind of ~$1.5 to $2.0 billion and 0.15 to $0.20.
Mizuho reiterated its “buy” rating on Apple and reduced its price target to $600 per share from $750. Lamba wrote, “In our view, the overhang created by potential consensus estimate cuts in the near term will likely keep weighing on the stock despite the potential upside for iPhone's forecast for December. The stock’s current valuation is likely baking in ~10% downward estimate revision to current FY13 consensus EPS of $50, which we believe is aggressive.”
The analysts summed up their views as follows:
We are lowering our price target to $600 from $750 as we believe near-term headwinds from potential F2Q13 estimate cuts combined with lack of material upside to FY13 estimates will make it harder for the stock to revisit it’s all-time high of $700+. However, Apple continues to be the leader in the smart phones and tablets spaces where it commands a loyal customer base. Current valuation combined with 2% dividend yield and double-digit earnings growth make it an attractive stock although estimates need to reset before it starts working again.
Earlier today, Canaccord Genuity and Pacific Crest Securities also downgraded Apple Inc. (NASDAQ:AAPL) due to weaker-than-anticipated global demand for the iPhone. The research firms also noted that the main risks affecting Apple include the uncertainty of the macro environment and the faster-than-expected decline in gross margins of its key products.
Analysts from Citi Research downgraded Apple Inc. (NASDAQ:AAPL) yesterday.