Shares of Apple Inc. 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:
- 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.
- At ~43 million, iPhone sell-thru is down 7 percent y/y and below Stifel’s expectation of 40-50 million.
- Apple continues to face revenue declines in China, and reported a 30 percent y/y decline for FQ1 2017
- “We believe we should take a cautious view on F2Q17 and F3Q17 expectations,” the analyst wrote.
- Rakers believes investors would “take a tempered view” on Apple’s installed base upgrade rate for the iPhone
- 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.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.