Apple Inc. (AAPL) Receives A Trio Of Downgrades

Apple Inc. (AAPL) Receives A Trio Of Downgrades
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Apple Inc. (NASDAQ:AAPL) has received two downgrades today from Canaccord Genuity and Pacific Crest Securities. These downgrades build on Citi Research’s downgrade, which we reported yesterday; seems to suggest that there is a growing negative outlook on Apple.

Apple Inc. (AAPL) Receives A Trio Of Downgrades

Both of these latest downgrades were primarily influenced by the weaker-than-anticipated global demand for iPhones. Pacific Crest Securities pointed out that the low iPhone demand influenced its decision to slash the price target from $645 to $565. To add to this, the high end smartphone market seems somewhat saturated. Pacific crest believes that this saturation, coupled with thinning demand for the iPhone, is reducing apple’s ability to add new iPhone users. In light of this, Pacific has gone a step further and reduced its fiscal 2013 iPhone unit estimates to 151 million from 174 million and its fiscal 2014 estimate to 161 million from 181 million.

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As if to paint a darker shade of gloom, Pacific Crest contends that Apple Inc. (NASDAQ:AAPL) itself is approaching saturation of its addressable market; suggesting that this will have wide-reaching consequences on iPhone unit volume going forward. Nevertheless, Pacific Crest still maintains that Apple Inc. (NASDAQ:AAPL) is the leader in the high end of the smartphone market.

Other key highlights in the Pacific Crest report include a lowered EPS estimate for both fiscal 2013 and fiscal 2014. Pacific cut the EPS estimates for F13 from $51.49 to $45.13 and for F14 from $53.50 to $47.40.

New iPhone products in the June quarter?

Canaccord’s downgrade, which comparatively passes by as less harsh, reiterates its buy recommendation but reduces the price target to $750 from $800. Just like Pacific Crest, Canaccord argues on the lines of thinning iPhone demand. Nonetheless, Canaccord bears a more bullish outlook, arguing that reduced iPhone 5 orders in the March quarter could as well be indicative of an earlier launch of new iPhone products in the June quarter.

Apart from the recurrent mentioning of the lowering global demand for the iPhone, Canaccord also took note of the stalled iPad 4 sales. Just like Citi argued, Canaccord also believes that the iPad mini is cannibalizing iPad 4 sales, demonstrating the market’s gravitation toward devices in the low price territory. In conclusion, Canaccord was keen to outline the investment risks tied to Apple. The research firms points out that the uncertain macro environment and the faster-than-expected decline in gross margins of key products are some of the main risks tied to Apple.

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