Bull Scales Back Apple Inc. (AAPL) iPhone Production Estimates Amid High End Smartphone Market Weakness

Jun Zhang stands by his AAPL iPad expectations even as he sees reason to be less enthusiastic on iPhone production.


Is the Apple Inc. (NASDAQ:AAPL) iPhone X about to take a backseat to new MacBook and iPads with a bull’s eye on the education market?

Rosenblatt analyst Jun Zhang sees that the iPhone X is “nearing [the] end of [its] life cycle,” and as such scales back iPhone Q2 production expectations starting in April from 2.5 million to a range of 1.0 to 1.5 million monthly units. Likewise, the analyst is dialing down his second quarter iPhone production forecast from 38 million to 36 million units.

“With Samsung’s […] S9 3 million unit order cut this week, we continue to believe the high end smartphone market is not recovering,” notes Zhang.

That said, the analyst maintains a Buy rating on AAPL stock with a $180 price target, which implies a 7% upside from current levels. (To watch Zhang’s track record, click here)

“As expected, the new iPad 9.7-inch model is retaining the industrial design seen in previous models, but we note that we have not seen 3D sensing features in the iPad Pro at this event, likely suggesting to us that Apple is not yet ready for 3D sensing on a large screen device. We now believe Apple might launch the new iPad Pro with 3D sensing in Q3, but we maintain our iPad Pro production estimate of around 6 million units/quarter,” continues the analyst, adding that with regards to the new iPad model: “We also expect the potential new iPad to use a slightly different 3D sensing design, which could feature a larger dot projector and a larger camera receiving module. The dot projector and receiving model could also be placed further apart.”

Zhang may continue to bet on this stock, but on a less confident note: “Other than school teachers and students, we believe the average consumer did not walk away excited from the Apple event.”

Overall, TipRanks indicates sell-side analysts are optimistic on the tech world’s big AAPL machine. Out of 29 analysts polled in the last 3 months, 16 are bullish on AAPL while 13 remain sidelined on the stock. With a return potential of 13%, the stock’s consensus target price stands at $190.63.