Apple Downgraded By BTIG, Sees 4% Decline In Revenue

Apple Inc. AAPL is scheduled to report its quarterly earnings on April 25. BTIG’s Walter Piecyk maintained a Buy rating for the company, while reducing the price target from $141 to $130. The analyst said that Apple’s return to revenue growth could be delayed till fiscal 2017, and the company may report a 4 percent decline this fiscal year.

Analyst Walter Piecyk mentioned that the positive rating reflected the stock’s valuation, anticipation for the next product announcement and low Street expectations for the March quarter.

Structural Change In Replacement Cycle For Apple Phones

Pierck expressed caution regarding a potential structural change in the replacement cycle of Apple’s existing users. The upgrade rate for iPhones declined in 4Q and the rate of decline has accelerated in the first quarter, he pointed out.

“It will take a few quarters and the launch of the next iPhone to confirm if end users are, in fact, holding onto their phones longer,” the analyst added.

The revenue mix shift away from iPhones is also expected to provide incremental headwind to Apple’s margins. The company’s EPS is expected to decline this fiscal year.

“We expect Apple to return to revenue growth in Fiscal 2017 (+3%) which should be further leveraged by their persistent share repurchase program, resulting in single digit EPS growth,” the BTIG report stated.

The EPS estimates for fiscal 2016 and 2017 have been reduced by $0.54 to $8.87 and by $0.53 to $9.57, respectively.