The estimates for iPhone suppliers have been reduced to reflect weaker-than-expected demand trends for the iPhone 6s in Asia, Pacific Crest’s Michael McConnell mentioned.
iPhone suppliers are headed for earnings misses, with demand for Apple Inc. AAPL under severe pressure.
“While near-term Samsung supply-chain estimates reflect strength, we see increased risked to forward estimates now that all major promotional activity has ceased for the GS7,” McConnell wrote.
Investors are likely to look beyond near-term volatility and focus on the upcoming iPhone 7 refresh cycle in the back half of 2016, McConnell commented.
Broadcom
The analyst maintained an Overweight rating for Broadcom Ltd AVGO, with a price target of $170. The revenue and EPS estimates for the current quarter have been reduced from $3,554.0 million to $3,544.8 million and from $2.38 to $2.37, respectively. The EPS estimate for 2016 has been reduced from $10.54 to $10.35.
“We are lowering our estimates for Broadcom to reflect concerns associated with a weakening Apple iPhone supply chain and, to a lesser extent, weakening macro demand trends in enterprise and storage,” the Pacific Crest report noted. McConnell added, however, that the company is among the “best stories in semiconductors this year.”
Cirrus Logic
The analyst maintained an Overweight rating for Cirrus Logic, Inc. CRUS, with a price target of $40. The revenue and EPS estimates for the current quarter have been reduced from $228.0 million to $225.3 million and from $0.23 to $0.21, respectively. The EPS estimate for 2016 has been reduced from $2.24 to $2.23.
“We continue to see Cirrus as a key beneficiary of the transition to digital and ambient noise canceling (ANC) headsets associated with the iPhone 7 upgrade cycle,” the report stated.
InvenSense
McConnell maintained a Sector Weight rating for InvenSense Inc INVN, with a fair-value estimate of $7. The revenue estimate for the current quarter has been reduced from $80.7 million to $80.1 million. The EPS for the current quarter is at $0.
“Risks associated with investing in the stock include market and macroeconomic conditions, as well as company-specific risks such as pricing pressures, market-share loss and a slowdown in demand,” the analyst wrote.
Synaptics
McConnell maintained a Sector Weight rating for Synaptics, Incorporated SYNA, with a fair-value estimate of $75. The revenue and EPS estimates for the current quarter have been reduced from $453.3 million to $449.9 million and from $1.52 to $1.50, respectively. The EPS estimate for 2016 has been reduced from $6.47 to $6.35.
“While we view the fingerprint design win at Huawei as encouraging, the multitude of crosscurrents keeps us at Sector Weight,” the analyst commented.
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