Red flags were thrown up by analysts today regarding the prospects of the technology giant Apple Inc.(NASDAQ:AAPL) and Mexican fast food giant Chipotle Mexican Grill, Inc. (NYSE:CMG). Let’s take a look and see what the analysts have to say about AAPL and CMG.
Rosenblatt Securities analyst Jun Zhang downgraded Apple shares from a Buy to a Neutral rating, with a price target of $102, which represents a slight upside potential from current levels.
Zhang explained, “We believe iPhone 6S sales have slowed down during the holiday season reaching high market inventory levels. Therefore, we believe iPhone production has been reduced again in the past two weeks to 43M units for the March quarter. Now, we expect March quarter iPhone sales to be around 45-46M, considering enough inventory in the retailing channels.”
“The next headwind for iPhone sales will most likely be China’s slowing smartphone market. In addition, we believe the rise of Huawei in China will be the main threat to iPhone’s market share, especially to their old models such as the iPhone 6 and iPhone 5S,” the analyst added.
The analyst concluded, “We believe China Mobile users, who have more than one smartphone and one cell number, account for 60% of the total subscriber base. This is why we believe 4G smartphone growth will slow down from 200% YoY in 2015 to 30-40% YoY in 2016. Also, we think China’s iPhone sales growth will also slow down to 100% YoY growth in 2015 to 20- 30% YoY growth in 2016. Apple’s other new products, such as the iPad Pro, iWatch and Apple TV, have not become meaningful revenue resources to offset slowing iPhone sales in 2016.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jun Zhang has a yearly average return of -19.7% and a 15.4% success rate. Zhang has a -6.3% average return when recommending AAPL, and is ranked #3437 out of 3647 analysts.
Out of the 51 analysts polled by TipRanks, 37 rate Apple stock a Buy, 12 rate the stock a Hold and 2 recommend Sell. With a return potential of 45.6%, the stock’s consensus target price stands at $145.95.
Chipotle Mexican Grill, Inc.
Wells Fargo analyst Jeff Farmer reiterated a Market Perform rating on shares of Chipotle, while reducing his estimates after the company lowered its fourth-quarter guidance for the fiscal year 2015. The company also announced that it will face grand Jury as it has been served with federal subpoena for criminal investigation related to norovirus outbreak at its restaurant in California.
Farmer commented, “Chipotle has taken, and continues to take, big hits to both brand perception and brand reliability. The latest comes with today’s 8-K filing, in which in addition to reporting a Q4 SSS decline of 14.6% and an expectation for Q4 EPS in the range of $1.70-1.90, CMG also disclosed that it has been subpoenaed by a grand jury. News of the subpoena in connection with a criminal investigation being conducted by the U.S. Attorney’s Office for the Central District of California both magnifies and extends the brand perception/reliability headwinds.”
The analyst concluded “For the fourth time in six weeks, we are reducing our CMG SSS and EPS estimates across the board. Our Q4 2015E SSS moves to -14.6% from -14% and 2016E SSS to -4% from flat. Our 2015E EPS falls to $14.80 from $15.17 and 2016E EPS moves to $13.74 from $16.18 (Street at $15.77). We are lowering our valuation range to $420-450 from $480-505.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Jeff Farmer has a yearly average return of 19.7% and a 86.4% success rate. Farmer has a 11.9% average return when recommending CMG, and is ranked #311 out of 3647 analysts.
Out of the 27 analysts polled by TipRanks, 11 rate Chipotle stock a Buy, 14 rate the stock a Hold and 2 recommend Sell. With a return potential of 34%, the stock’s consensus target price stands at $572.55.