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Why This Notable Analyst Reduced iPhone Estimates Across The Board

Why This Notable Analyst Reduced iPhone Estimates Across The Board
  • Apple Inc. (NASDAQ: AAPL) shares have lost 10 percent in the last month, slipping below the $110 mark on December 17.
  • FBR & Co’s Daniel H. Ives maintained an Outperform rating on the company, while reducing the price target from $175 to $150.
  • Although Apple has the opportunity to further penetrate its customer base, soft 6s demand calls for the revision in estimates, Ives stated.

Softer than expected iPhone 6s demand data points and weaker supply chain warrant a downward revision in the estimates, analyst Daniel Ives said. The iPhone shipment forecasts have been reduced - for December 2015 from 77 million to 75.5 million units, for March 2016 from 60 million to 52 million units, and for June 2016 from 51 million to 47 million.

The iPhone unit estimates for FY16 and FY17 have been reduced from 243 million to 223.5 million and from 259 million to 255 million, respectively.

The total revenue estimate for F1Q16 has been reduced from $77.0 billion to $76.7 billion, although the EPS estimate has been kept unchanged at $3.24.

The total revenue and EPS estimates for FY16 have been reduced from $245.8 billion to $238.9 billion and from $9.80 to $9.65, respectively to reflect weaker 6s demand. The total revenue and pro forma EPS estimates for FY17 have been lowered from $261.2 billion to $255.5 billion and from $10.93 to $10.54, respectively.

Merely a little over 30 percent of Apple's user base have upgraded to iPhone 6/6s till date. Ives pointed out that this represents a “massive green field opportunity” for Apple to further penetrate its unrivaled customer base over the coming years. He believes that China would continue to be “the main fuel in the tank” for the company.

Latest Ratings for AAPL

Jan 2020MaintainsNeutral
Jan 2020MaintainsOverweight
Jan 2020MaintainsBuy

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