BTIG Cuts Apple's Target To $115, But Maintains Buy

On April 25, Apple Inc. AAPL issued a disappointing FQ3 guidance.

BTIG’s Walter Piecyk maintains a Buy rating on the company, while lowering the price target from $130 to $115.

Estimates Lowered

Piecyk mentioned that despite the recent cut in the estimates for Apple driven by concerns regarding a lengthening product cycle, the FY2017 EPS estimate has been lowered to reflect lower ASP expectations for the iPhone, as well as lower operating margin expectations.

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“Apple sold 51 million iPhone this quarter, which was 1.2 million higher than our estimate. However, steeper than expected declines in ASPs resulted in iPhone revenue in¬line with our estimate of $32.8 billion,” Piecyk stated.

The analyst pointed out that management’s commentary suggested the potential for further ASP erosion due to the higher mix of the iPhone 5E. The June ASP estimate has accordingly been lowered from $655 to $626.

Unit Estimate Maintained

Piecyk also explained that with the June quarter iPhone estimate maintained at 40 million units sold, the revised ASP estimate has brought the total revenue estimate to the midpoint of the company’s revenue guidance range of $41–$43 billion.

“This gave us greater confidence that our June estimate of iPhones sold should remain unchanged at 40 million,” the analyst said.

Piecyk noted that it was too early to estimate whether the next iPhone could lead to revenue growth for Apple.