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Stifel Downgrades Apple Following Weak iPhone Guidance, Lacking Near-Term Upside Catalysts

Stifel Downgrades Apple Following Weak iPhone Guidance, Lacking Near-Term Upside Catalysts
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Shares of Apple Inc. (NASDAQ: AAPL) could remain range bound between $105 and $120 over the next couple of quarters, until there are some visible upside catalysts, Stifel’s Aaron C. Rakers said in a report. He downgraded the rating on the company from Buy to Hold, while reducing the price target from $130 to $115.

Analyst Rakers said the downgrade reflected weaker-than-expected iPhone sell-thru and a lack of upside catalyst.

The Negatives

Rakers enumerated six areas of concern:

  1. Apple guided to its FQ1 2017 revenue at $76-$78 billion, coupled with the projected of flat y/y iPhone ASP. This implies ~75-77 million iPhone ship expectations, versus the analyst’s prior estimate of 76.6 million.
  2. At ~43 million, iPhone sell-thru is down 7 percent y/y and below Stifel’s expectation of 40-50 million.
  3. Apple continues to face revenue declines in China, and reported a 30 percent y/y decline for FQ1 2017
  4. “We believe we should take a cautious view on F2Q17 and F3Q17 expectations,” the analyst wrote.
  5. Rakers believes investors would “take a tempered view” on Apple’s installed base upgrade rate for the iPhone
  6. Apple guided to its FQ1 2017 gross margin at 38.0-38.5 percent, versus Stifel’s prior estimate of 39.5 percent.

“We were admittedly looking for a solid F4Q16 beat-and-raise; leading into clearer upside potential for F1Q17,” the analyst commented.

Latest Ratings for AAPL

Jun 2018ArgusMaintainsBuyBuy
May 2018Maxim GroupDowngradesBuyHold
May 2018Morgan StanleyMaintainsOverweightOverweight

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

Posted-In: Aaron C. Rakers StifelAnalyst Color Downgrades Price Target Analyst Ratings Best of Benzinga


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