Apple Inc. (AAPL) Price Target Cut 2 More Times

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Apple Inc. (AAPL) Price Target Cut 2 More Times
JESHOOTS / Pixabay

Apple Inc. (NASDAQ:AAPL) has already received several price target cuts for the apparent weakness in the iPhone supply chain, but the company has received two more, with one being slashed $25. Both firms cite lower iPhone shipment expectations for their target and estimate cuts.

iPhone 6s demand looks soft

In a report dated Dec. 23, FBR & Co. analyst Daniel Ives said he maintains his Outperform rating on Apple Inc. (NASDAQ:AAPL) stock but has slashed his price target from $175 to $150 per share. He lowered his December quarter revenue estimate from $77 billion to $76.7 billion but left his earnings estimate of $3.24 per share the same. He also slashed his iPhone shipment estimate for the December quarter from 77 million to 75.5 million units. For the March quarter, he cut his shipment estimate from 60 million to 52 million units.

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For fiscal 2016, he trimmed his revenue estimate from $245.8 billion to $238.9 billion and his earnings estimate from $9.80 to $9.65 per share. All of these downward revisions are due to soft demand for the iPhone 6s.

Looking forward to the iPhone 7

Ives expects the iPhone 7 to turn things around in terms of iPhone demand, saying that he believes Apple “is poised to benefit from pent-up consumer demand/ mega product cycle heading into September 2016. In fact, he believes the iPhone 7 cycle will be a “make or break” cycle as he said the iPhone 6 cycle was “euphoric.”

He does note that so far only about 30% or slightly more of Apple’s user base has either an iPhone 6 or newer, which leaves plenty of opportunity for unit sales on upgrades. The analyst called China “the main fuel in the tank” in terms of growth from now on.

What is Apple’s next big thing?

Ives does agree with much of Wall Street that the iPhone will remain especially important for Apple’s growth in the near term, especially with next year’s iPhone 7 lineup, as they are expected to be thinner than their predecessors and waterproof. However, he also thinks it’s important that company management remains very focused on further opportunities for growth, like music or possibly video streaming, augmented reality, the Apple Watch and the rumored Apple car. He believes that all of Apple’s new offerings indicate that innovation is alive and well there.

The FBR analyst also likes the iPhone maker’s attempts to grow in the enterprise market through the iPad Pro release and the partnership with IBM. In fact, he suggests that a major acquisition might be in order, naming Box as a potential candidate. He also expects more products to woo enterprise customers.

He also thinks investors will be happy if Apple Inc. (NASDAQ:AAPL) ratchets its share repurchase program to between $75 billion and $100 billion, tapping into its massive cash pile to do it, even though the issue of tax dodging allegations remains a heated debate for Apple and other major technology companies with a habit of stashing cash overseas to cut their tax bills.

Stifel cuts price target too

In a report dated Dec. 22, Stifel analyst Aaron Rakers and his team echoed many of the same sentiments as Ives and also cut their price target for Apple, pushing it down from $150 to $140 per share. They maintained their Buy rating on the stock.

Rakers looked further out into Apple’s future, cutting both his March and June quarter iPhone estimates. significantly He now expects the company to ship 56 million iPhones in the March quarter and 44.8 million in the June quarter, compared to his previous estimates of 61.2 million and 47.5 million respectively. However, he upped his average selling price estimate slightly, offsetting the unit decline.

He now estimates that as of the end of September, Apple Inc. (NASDAQ:AAPL) had more than 580 million iPhone users, compared to the September 2014 estimate of about 446 million active iPhone users. He highlighted that switching trends from Android to iOS devices remain strong, with Ericsson estimating that the number is double during iOS product cycles than it is right before new product launches. Further, he remains positive on the switch rate moving into the iPhone 7 cycle in 2016.

Shares of Apple Inc. (NASDAQ:AAPL) climbed by as much as 1.18% to $108.49 per share during regular trading hours on Wednesday.

Updated on

Michelle Jones is editor-in-chief for ValueWalk.com and has been with the site since 2012. Previously, she was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Email her at Mjones@wordpress-785388-2679526.cloudwaysapps.com.
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9 COMMENTS

  1. The hardware is objectively mediocre. That the software is lame is my opinion; I understand you may have lower standards than me, that’s okay.

    iPhones are good for people who don’t want to bother researching their purchases, since the brand guarantees a ‘lower bound’ on the quality. But excellence? Excellence is found elsewhere.

  2. So Ives cut his sales estimates from 77 to 76.7 i.e 0.4%, leaves his profit estimate unchanged, and cuts price target fro $175 to $150 i.e. 13.2%

    Genius.

  3. Same old crap about iPhone weak sales and people waiting on next version of iPhone. Analysts, unlike the weather man, make predictions that are based on smoke. The worst is that they don’t even recognize they were wrong when their predictions are … wrong. But that’s the name of game. If they apologize then it means they are inept and incapable.

  4. wow revunue down 7 billion big deal. but hey amazon and netflix keep losing money or make ridiculous profits whenever they do but yeah lets trade them at 400 times pe

  5. What’s so hysterical to me is the same headlines Apple had when it came out with … iPod, iPad, iPhone etc.. Remember the cover of Barron’s in 2013 a picture of a rotten apple. And they added 400 billion to the cap, 200 billion in free cash. Yeah you analysts and media bloggers def have no life at all. They are probably building this 5 billion dollar 2.5 million square ft campus office so they could succumb to failure.

  6. It cracks me up that all you analysts actually think you know anything about Apple. You talk about the interworking of Apple like you actually know something and you don’t. You don’t even reference how you actually come to these goofball conclusions. I can’t remember the last time a analyst was correct about Apple. Does anyone?

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