BMO Capital analyst Tim Long is updating his models for Apple Inc. (NASDAQ:AAPL) and QUALCOMM, Inc. (NASDAQ:QCOM), following last night’s pre-announcement by Qorvo (NASDAQ:QRVO). Qorvo pre-announced a big (15%) cut to its december quarter guidance citing weaker-than-expected “demand in the Company’s Mobile Products segment.”
Tim Long reiterated an Outperform rating on shares of Apple, while reducing the price target to $133 (from $142), as Qorvo is the latest in a large number of suppliers to highlight weakness in smartphones, which would be attributed to Apple.
Long observed, “We view the Qorvo miss as a more meaningful indicator than the others. We witnessed some softness when we were in Asia last month, and at the time, we weren’t convinced that December and March units needed to go down too much. We underestimated the magnitude of the unit weakness at Apple.”
“We are lowering our FY 2016/2017 EPS estimates from $10.04/$11.14 to $9.50/$10.43. We are assuming 74 million iPhone units in the December quarter, with 56 million in March. The supply chain data indicates a slightly lower number for March, but historically iPhone shipments have outperformed the supply chain in the March quarter,” the analyst added.
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Tim Long has a yearly average return of 2.9% and a 39% success rate. Long has a -13.3% average return when recommending AAPL, and is ranked #1121 out of 3630 analysts.
Out of the 32 analysts polled by TipRanks in the last 3 months, 25 rate Apple stock a Buy, while 7 rate the stock a Hold. With a return potential of 46.05%, the stock’s consensus target price stands at $141.85.
Long maintained a Market Perform rating on shares of Qualcomm, and reduced the price target for the stock to $47 (from $48), expressing concerns that estimates keep falling, and that no catalysts emerged from the strategic review.
The analyst noted, “We are lowering our fiscal 2016/2017 EPS estimates from $4.07/$4.58 to $3.90/$4.53. Our numbers move lower based on less royalty revenues from Apple, as well as fewer chips, partially offset by our assumption that some more Chinese companies will begin paying royalties given all the recent announcements.”
As of this writing, out of the 19 analysts polled by TipRanks in the last 3 months, 11 rate Qualcomm stock a Buy, while 8 rate the stock a Hold. With a return potential of nearly 37%, the stock’s consensus target price stands at $63.03.