Goldman slashes its price target on Apple
Apple (AAPL) has been witnessing weaker-than-expected demand for its new iPhone models. Amid weakness in demand, on November 21, analyst Rod Hall of Goldman Sachs (GS) lowered his price target on the stock, reiterating its “neutral” rating. Goldman slashed Apple’s price target from $209 to $182.
Goldman Sachs has cut its price target on the stock for the third time this month, citing weakness in the company over the next year. Earlier, Hall had reduced his price target from $240 to $222 after the company’s soft fiscal 2018 fourth-quarter results and again reduced the target to $209 a week ago, citing falling demand for new iPhone models due to recent supply chain disruptions.
Apple’s soft demand for iPhones, including the XS, XS Max, and XR models, has pushed suppliers to cut down on orders. According to reports, Apple has ordered its suppliers, including Lumentum Holdings (LITE), Qorvo (QRVO), Universal Display, Cirrus Logic, and Skyworks Solutions (SWKS), to lower the production of its iPhone models from its original production plan.
In addition to the weakness in Apple’s premium iPhone demand, a rise in the number of Apple’s models has made it difficult for the company to understand the requirement of the number of components and phones.
Apple’s soft iPhone demand comes after Apple posted a disappointing fiscal 2019 first-quarter sales outlook on November 1. Apple reported better-than-expected revenue and earnings but missed iPhone shipment estimates in the fourth quarter of fiscal 2018, which ended in September. The company reported iPhone unit shipments of 46.9 million in the quarter, lower than analysts’ expectation of 47.5 million units.
Reduced first-quarter guidance
The company expects its revenue for the first quarter of fiscal 2019 to fall in the range of $89 billion–$93 billion, down from analysts’ estimate of $93.02 billion. According to Hall, Apple’s fiscal 2019 first-quarter results are expected to touch the lower end of Apple’s guidance.
Apple has also been facing headwinds in emerging markets, particularly in Turkey, India, Brazil, and Russia due to their currencies’ weakness against the US dollar.