Apple (AAPL) stock has only received 2 downgrades from Wall Street analysts in the past 12 months — both were issued today. The reason? Apple’s outlook for fiscal first-quarter revenue to be between $89 billion and $93 billion was weaker than the consensus analyst forecast for revenue of $93.02 billion. In addition, the Street seems to be disappointed that the iPhone maker will stop sharing unit sales metrics in fiscal 2019.
To the company’s credit, FQ4 EPS of $2.91 and revenue of $62.9 billion easily surpassed consensus estimates of $2.78 and $61.6 billion, respectively.
Rosenblatt analyst Jun Zhang commented, “We believe Apple’s slightly soft guidance reflects our recent view that Apple will reduce iPhone production (our estimates of a 6-million-unit production cut). We also recently reduced our iPhone shipment estimates due to weaker than expected iPhone XS and XR sell-through. The iPhone Max has been selling well and will most likely help increase ASP and gross margin, but we believe it will be difficult for ASP to grow in the second half of C2019.”
“We believe C2019 will be a tough year for all smartphone players due to the market transition from 4G to 5G. With 5G service launching in 2020, we believe consumers will delay their smartphone upgrades to 2020 and beyond,” the analyst added.
Zhang downgraded AAPL stock from Buy to Neutral, while keeping his price target at $200, which implies a slight downside from current levels. (To watch Zhang’s track record, click here)
Additionally, Merrill Lynch analyst Wamsi Mohan downgraded shares of Apple from Buy to Neutral, noting, “We see increased risk from a weaker macroeconomic environment. Post results we are incrementally concerned that not all the weakness is capture in N/T and we are likely to see further negative estimate.” (To watch Mohan’s track record, click here)
While Zhang and Mohan sit on the sidelines waiting for the stock to reset itself, most analysts on Wall Street anchor a bullish perspective on the tech giant, as TipRanks analytics showcase AAPL as a Buy. Based on 34 analysts polled in the last 3 months, 22 rate a Buy on Apple stock, 11 issue a Hold, while only 1 recommends a Sell. The 12-month average price target stands at $240.31, marking a nearly 16% upside from where the stock is currently trading. (See AAPL’s price targets and analyst ratings on TipRanks)