Why These 2 Apple Analysts Are Moving In Opposite Directions Thursday

Zinger Key Points
  • BofA notices a slowdown in Apple services demand and expects product demand to follow. 
  • A Rosenblatt survey shows substantial interest in the Apple's new iPhone 14 Pro Max and Ultra watch.
Why These 2 Apple Analysts Are Moving In Opposite Directions Thursday

Apple Inc AAPL stock was re-rated by two analyst firms, making nearly mirror opposite adjustments to the Cupertino-based company.

What Happened: BofA Securities analyst Wamsi Mohan Downgraded Apple from Buy to Neutral on Thursday and lowered the price target from $185 to $160. On the flip side, Rosenblatt analyst Barton Crockett Upgraded Apple from Neutral to Buy and raised the price target from $160 to $189.

BofA's Take: BofA was concerned Apple's recent outperformance sets it up to underperform over the next year on weaker demand trends. The firm said it noticed a slowdown in services demand and expects product demand to follow. 

"Shares have outperformed significantly YTD and have been perceived as a relative safe haven. However, we see risk to this outperformance over the next year, as we expect material negative est. revisions driven by weaker consumer demand," BofA analysts wrote in a note to clients.

Related Link: Is Apple Stock A 'Safe Haven' For Tech Investors? Here's What iPhone Demand Trends Show

BofA lowered its estimates as a result of the anticipated demand slowdown. The analyst firm expects Apple to earn $5.87 per share in 2023 on revenue of $379 billion, which is well below consensus estimates of $6.46 per share on revenue of $412 billion. 

Still, BofA noted the company's long-term prospects remained favorable. Potential upside drivers included stronger iPhone Pro sales and new product offerings. 

Rosenblatt's Take: Rosenblatt also saw a favorable environment for Apple over the long term, and the firm was much more positive than BofA over the near term following a "constructive" survey of more than 1,100 U.S. adults, "highlighting substantial interest in the company's new iPhone 14 Pro Max and Ultra watch."

"We see reason to believe that consumers in other countries share this enthusiasm, prompting us to embrace more constructive near-term and long-term estimates," Rosenblatt analysts wrote in a note to clients.

The survey was conducted on Sept. 20 and found that 29% of respondents have either already bought or plan to buy the iPhone 14. Thirty-three percent of current iPhone owners and 18% of Android users said they plan to buy the new iPhone model.

Rosenblatt also touched on a Bloomberg report from earlier this week indicating Apple told suppliers to pull back on efforts to increase the iPhone 14 product family by as many as 6 million units in the back half of this year "after an anticipated surge in demand failed to materialize."

Rosenblatt analysts interpreted the report as showing that consumers clearly prefer Apple's more expensive models, which aligned with its survey results.

"There is also a recent history of comparable reports proving to be misleading when actuals come out," the firm said.

Related Link: See what analysts are saying about stocks on Benzinga's analyst page

Why It Matters: The report sent shares of Apple tumbling to their lowest levels since July. Several analysts have questioned the accuracy of the report this week. 

Loup Ventures' Gene Munster noted demand trends continue to be strong, despite past history showing that it tends to pull back following an initial surge for a new release, which hasn't happened this time.

"We've checked iPhone demand over eight countries in the last day through lead times. They continue to be elevated," Munster said at the beginning of the week.

Wedbush analyst Daniel Ives also echoed a similar sentiment on Twitter following the report.

Related Link: Is iPhone Demand Really Slowing Down? Apple Analyst Says This Data Point Proves Otherwise

AAPL Price Action: Apple has a 52-week high of $182.94 and a 52-week low of $129.04.

The stock was down 5.49% at $141.56 Thursday afternoon at publication, according to Benzinga Pro.

Photo: Courtesy Apple

Posted In: Barton CrockettDan IvesGene MunsteriPhone 14 ProiPhonesWamsi MohanUpgradesDowngradesPrice TargetTop StoriesAnalyst Ratings