Apple Edges Lower like Goldman Sours on iPhone Forecasts, cutting price targets
Apple Inc. (AAPL) shares edged lower Tuesday after analysts at Goldman Sachs cut their estimate for iPhone sales and group sales for the tech giant 2019 fiscal year.
Goldman slashed its full-year total iPhone unit sales forecast of 6%, trimming the revenue estimate by 3.5%, after one of Apple's key suppliers, Lumentum Holdings (LITE), issued a winning event Monday that accounted for almost a third of the component maker's market value and triggered a 5% drop for Apple to bring the Dow Jones Industrial Average into a 500-point tailspin. Goldman also reduces its price target on Apple to $ 209 from $ 222 per share.
"We are concerned that the demand for new iPhone models worsens," wrote Goldman analysts. "Although Apple may already have thought of some weakness in its guidance, we feel that the timing and size of the LITE reduction indicate … gradually poorer demand data."
Apple shares fell 0.2% to $ 1[ads1]93.77 in trading on Tuesday. The stock was traded moderately higher earlier in the session.
"We recently received a request from one of our largest industry and consumer customers for laser sensors for 3D sensors to reduce their shipments significantly during our second quarter last year for previously ordered orders originally scheduled for delivery in the quarter" says CEO Alan Lowe. "With our proven ability to deliver high volumes, years of experience, hundreds of millions of units in the field and new product and customer funnel, we remain safe in our leading position in the exciting market for laser diode for 3D sensing." [19659002] Earlier Monday, another Apple supplier, Japan Display, which makes LCD displays, cut its full year sales growth and margin forecasts after posting its sixth quarterly operating profit of 4.7 billion yen (413 million dollars) in the three months ending in September.
Last week, Apple shares were hit by a report from the Nikkei business daily, who said important Taiwan-based vendors said that Foxconn and Pegatron were asked to stop the new production capacity until they became clearer on the iPhone XR requirement from apple
The reports followed a decision from Apple to no longer provide detailed figures for the sale of the individual product, such as iPhones and Macs, which means that investors will no longer be able to calculate their average selling price, a key calculation as is used to measure the company's profitability.
The decision to delete that guidance as well as forecasts for sales in December of the quarter of around 91 billion dollars during the three months ending in December overshadowed a stronger than expected September quarter which looked better than expected earnings at $ 2.91 per share and consolidated revenue of $ 62.9 billion and sent shares tumbling more than 6.3% Friday, the largest single-day decline since 2014.
"The lack of transparency is disappointing and will likely limit investor visibility in the company, "said BMO Capital Markets Tim Long. "Our view is that units can not grow at all in the future, and while (average sales prices) still increase, they will at some point plateau."
Apple launched the 6.1 inch LCD version of its iPhone, XR, at around $ 750 in early September as a cheaper alternative to the more expensive iPhone XS, XS Max, starting at $ 1000 and $ 1,100, respectively.
"While we are not expecting the new series to drive volume growth to levels seen during the iPhone 6 cycle, due to a mature smartphone market, revenues should still see a very healthy jump due to a continued rise in average selling prices , with the likelihood that iPhone customers will on average upgrade to XR and premium buyers probably choose the new iPhone XS Max (top models cost $ 1,450), says analysts at Trefis.
Apple said it changed 46.9 million iPhones in during the three months ending in September, a figure that was largely in line with analysts' forecasts but was flattered by a much stronger than expected average selling price of $ 793, peaked at $ 751 and increased by 28.3% from the same period last year.
Service revenue, including the App Store, Apple Music, iCloud Storage and Apple Pay sales, increased by 27% to $ 10 billion, but decreased from 31% recorded in June quarter, a relief that may have been affected by the slower pace of iPhone sales that reduces the so-called installed base.
