One by one, analysts covering Apple Inc. (NASDAQ:AAPL) have nudged their price targets for the stock lower and lower. Philip Elmer-DeWitt of Fortune has been tracking numerous analysts who cover the stock, and he notes a significant sign that could indicate that times are changing for the company.
Only one analyst left with PT over $700 for Apple
Charlie Wolf of Needham lowered his price target for Apple to $595—leaving Brian White of Topeka Capital as the lone analyst whose price target for Apple Inc. (NASDAQ:AAPL) is still over $700 per share. White’s target is still at $888, although he did have it set at $1,111 previously. Even well-known Apple Inc. (NASDAQ:AAPL) guru Gene Munster has his target set at $655 per share, which puts him in second place after White for the highest target price.
According to Elmer-DeWitt, more than half the analysts they were tracking had their price targets for Apple Inc. (NASDAQ:AAPL) set at $700 per share or higher. Of course this is an important number and time frame because it was in September that the stock did top $700 per share before gradually falling to today’s level. Almost one year ago, the median price target for Apple was $770 per share, but now it is just $530 per share.
Wolf’s history covering Apple
He also notes that Wolf doesn’t change his price targets all the time like some analysts at other firms do. He looks at his price target for Apple Inc. (NASDAQ:AAPL) only two times per year—February and August. Today was the big day, and he changed his price target for the stock, citing a “more hostile competitive environment.”
Wolf notes declines in Apple valuation
According to Wolf, declines in the valuation of Apple Inc. (NASDAQ:AAPL)’s various segments have shaped his latest review of the company. He reported that the 42.3 percent decline in Apple Inc. (NASDAQ:AAPL)’s Mac segment showed just how much tablets are cannibalizing PC sales. In second place was the iPad, which declined 37.2 percent. He said this is a concern because the average selling price is lower as buyers instead opt for the less expensive iPad Mini.
He also said the iPhone’s value fell 15.4 percent because of the more competitive market. He predicts that the company’s market share will continue eroding if the company continues with only a single flagship model. He thinks Apple Inc. (NASDAQ:AAPL)’s market share will increase if it releases a low cost model along with the new flagship model. However, he said the falling gross margin which comes with selling a less expensive model could offset most of the unit sales growth.
Wolf said the smallest decline in value came from Apple’s iTunes, software and services, and accessories segment. He said this is a reflection of shifting revenue mixes as the company shifts from software with high margins to content and services with loer margins.