From a note to clients by analyst Jun Zhang that landed on my desktop Monday:
We believe Apple’s slightly soft guidance reflects our recent view that Apple will reduce iPhone production (our estimates of a 6-million-unit production cut). We also recently reduced our iPhone shipment estimates due to weaker than expected iPhone XS and XR sell-through. The iPhone Max has been selling well and will most likely help increase ASP and gross margin, but we believe it will be difficult for ASP to grow in the second half of C2019.
We remain positive on the iPad upgrade cycle, after the launch of the new iPad Pro in October.
We believe C2019 will be a tough year for all smartphone players due to the market transition from 4G to 5G. With 5G service launching in 2020, we believe consumers will delay their smartphone upgrades to 2020 and beyond.
Downgrades rating to Neutral from Buy. Maintains $200 price target
My take: This makes more sense than the Buy/$200 combo that Zhang maintained when Apple was trading above $230. As I write this, with Apple at $199,37, Zhang’s price target is above water for the first time I can remember.