Rosenblatt cuts Apple price target to $165

Philip Elmer-DeWitt

Analyst Jun Zhang expects the rest of the Street will cut theirs too.


From a note to clients that landed on my desktop Thursday:

We have lowered our C1Q19 iPhone shipment estimates twice over the last two months. We currently forecast Apple will produce ~39 million units and ship ~39 million units for the March quarter. Although we are at the low end of consensus iPhone estimates, we believe the street will continue to trim down their estimates.

Currently, we believe Apple’s iPhone production will remain stable for the December and March quarters. We believe iPhone X and XR sales will be similar to iPhone XS/ Max sales during the holiday season due to promotions for the X and XR by retailers and telecom operators. After the holiday season, we expect iPhone XR and XS production to come down slightly.

iPad Pro sales have been weaker than we expected so far, which we believe is due to the price range impacting customer upgrades. Despite Apple’s pricing strategy already affecting unit growth, we do not believe the company will change its strategy in the near-term.

We expect the smartphone upgrade cycle to extend further during the transition from 4G to 5G. Despite an extended cycle, we believe the street’s estimates for Apple for FY2020 are too high. We believe the lack of iPhone shipment growth, along with tough comps for services revenues, will lead to estimates coming down.

Maintains Neutral rating, lowers price target to $165 from $200.

My take: Third time’s a charm?