Apple Inc. (NASDAQ:AAPL)’s iPhones and iPads don’t appear to be selling as well as expected, according to Citi analysts. In a report issued to investors this morning, they lowered their price target for the stock from $500 per share to $480 per share and maintained their Neutral rating on Apple Inc. (NASDAQ:AAPL) stock. They also reduced their sales estimates for both the iPhone and the iPad. The analysts’ concerns about weak iPhone demand are a continuation of worries from earlier in the current quarter.
In today’s report, the analysts said that in their regular checks on Apple Inc. (NASDAQ:AAPL)’s hardware supply chain, they continue to find evidence that demand for hardware parts is down. They admit that lowered demand for production does not necessarily mean that sales are down, although in this case they do suspect that it is an indication that demand for the iPhone 5 and the iPhone 4S is softening.
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Citi analysts pushed their expectations for the release of the iPhone 5S back to September from their initial expectations of June because they believe the tech giant could simply be clearing out its inventories prior to launching the iPhone 5S. However since the company appears to be building fewer iPhone 5 units, they see the effect as minimal, so they are attributing the slowing production to softening demand.
The analysts have lowered their iPhone unit estimate for the March quarter to 34 million units from 35 million units, which is well below the consensus of 37 million units. However they are maintaining their June quarter estimate of 25 million units, which is already quite a bit below the 32 million unit consensus.
Citi analysts are also concerned about Apple Inc. (NASDAQ:AAPL)’s iPad sales. According to their checks, they are also seeing softening in demand for components for the 10-inch iPad. They note that sales of the tablets have been declining in mature markets due to saturation, and they also believe the iPad Mini is cannibalizing sales of the larger iPad. However, their checks indicate that even sales of the iPad Mini appear to be slowing and will likely flatten out by the end of the June quarter.
The analysts have reduced their iPad sales expectations to 6 million units from 7 million units for the March quarter and their iPad Mini sales expectations to 12 million units from 13 million units. These new numbers push their forecast for total iPad sales to 18 million units, which is below the consensus of 19 million units.
Citi analysts also say they are beginning to doubt speculation that Apple Inc. (NASDAQ:AAPL) has a low-end iPhone in the works. “Clear indications of a low-end iPhone remain elusive,” the analysts wrote.