A February 2 note from Citi Research entitled “Slashing PC Estimates” painted a very bleak picture for PC sales in 2016. Despite harsh criticism for the call from investors at the time, a new report by analyst Jim Suva indicates that early 2016 PC data is supporting Citi’s bearish thesis.
On February 2, Citi called for 2016 PC unit forecast growth of -6.0 percent, well short of consensus estimates based on improving trends in the second half of 2015. “Our ‘Slashing PC Estimates’ sector call is bold, outright negative, and very different from consensus with tremendous pushback from investors,” Suva explained.
Related Link: New Apple Supplier Data Are Highly Correlated With Revenue
However, recently-released PC notebook ODM data from Taiwan indicates 38 percent m/m and 25 percent year-over-year declines in the month of January.
Citi is calling for a 20-25 percent quarter-over-quarter decline in notebook shipments for the March quarter.
Despite the bearish outlook, Citi maintained its Neutral rating on Intel Corporation INTC because of the stock’s solid valuation.
Citi’s top IT hardware stocks are Cisco Systems, Inc. CSCO and Apple Inc. AAPL. When it comes to tech supply chain stocks, Citi prefers Flextronics International Ltd. FLEX, Amphenol Corporation APH and TE Connectivity Ltd TEL. Citi also likes small cap plays Electronics For Imaging, Inc. EFII and SYNNEX Corporation SNX.
Disclosure: the author holds no position in the stocks mentioned.
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