John Paczkowski

Recent Posts by John Paczkowski

Among Analysts, Price-Target Cuts Are the Latest Apple Fad

Sweeney ToddThis week has been a rough one for Apple — two price-target cuts in as many days, both based on a mix of iPhone sales that are lighter than expected on the iPhone 5 side of things.

On Monday, Jefferies analyst Peter Misek cut his price target on Apple’s stock to $405 from $420, citing a reduction in iPhone build plans, caused by slowing sales. Now a second prominent Apple analyst has cropped his estimate, citing similar concerns.

Oppenheimer & Co.’s Ittai Kidron on Tuesday took a straight razor to his Apple price target, carving it down to $460 from $480. His rationale for doing so? Wavering demand for the iPhone 5, which may already be compromised a bit by customers delaying purchases as they wait for its successor. “Our checks suggest continued solid iPhone 4/4S demand and mixed iPhone 5 demand,” Kidron wrote in a research note to clients, saying he now expects iPhone sales of 26 million for the current quarter, down from his earlier forecast of 27 million.

The analyst expects that trend to continue until Apple releases the successor to the iPhone 5, and at this point, it’s looking like that’s not going to happen until fall. And Kidron figures that could be problematic for Apple’s September quarter.

“Our previous estimates also reflected a nearly full September quarter contribution from a new iPhone, which looks overly optimistic at this point,” Kidron said. “We still feel a September month launch and quarter-on-quarter volume increase are possible, but with our checks already showing signs of delayed iPhone 5 purchases, there’s still risk to our lowered estimate of 29 million in iPhone sales.”

In Kidron’s opinion, anyway. Apple’s reality may well jibe with it. And it may well not. As Apple CEO Tim Cook observed earlier this year, it’s always best to view reports about the company’s component purchases and build plans with a modicum of caution.

“I’d recommend questioning the accuracy of any kind of rumor about build plans,” Cook said. “I’d also stress that even if a particular data point were to be factual it would be impossible to interpret what it really means to our business. Our supply chain is very complex and we have multiple sources for our components. Yields can vary, supplier performance can vary. There’s just a long list of things that would make any single data point not a great proxy for what’s going on.”


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