Apple Inc. (AAPL) Price Target Downgraded To $780 By BAML

Today Merrill Lynch analyst Scott Craig echoed the advice of other investors who said to buy Apple Inc. (NASDAQ:AAPL) stock now while the price is so low. His advice definitely puts him in the bullish camp for Apple. However, unlike some other analysts who are also bullish on the stock, he actually decreased his target price for the stock from $840 to $780. Investors should note that even after Craig lowered his expected revenue and earnings per share of Apple, his estimate is still above consensus. He is estimating $197 billion revenue for Apple Inc. (NASDAQ:AAPL) in fiscal year 2013, while Wall Street analysts are estimating $194 billion in revenue for the same period.

Apple Inc. (AAPL) Price Target Downgraded To $780 By BAML

Craig said he trimmed his estimates for both this year and next year due to lower expectations in the number of iPhones sold. According to Craig, demand in the U.S. for Apple Inc. (NASDAQ:AAPL) products is dropping, and the company’s gross margin continues to be under pressure. He also believes that Apple shares are lower because as the end of the year approaches, investors may be locking in their profits.

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However he also says that the company has “healthy product cycles,” and that should push shares of Apple stock higher. Craig looked at the product cycles for the last two iPhones. He said shares of Apple Inc. (NASDAQ:AAPL) “underperformed the S&P 500 at the beginning of the cycle by as much as 37 points / 9 points, respectively.” However, he also found that as the strength of the iPhone continued, the stock reversed the trend by the end of the cycle, “with Apple Inc. (NASDAQ:AAPL) shares outperforming the S&P 500 by as much as 11 points / 42 points before the new products were announced.”