Tyler Durden reports for Zero Hedge on Goldman Sach’s new opinion of Apple Inc. following yesterday’s across-the-board earnings miss:
Tough quarter; removing from Conviction List, maintain Buy rating
We are disappointed by Apple’s quarter and guidance, as it reflects a much weaker iPhone 6s product cycle than we had anticipated, with most of the negative surprise vs. our expectations coming from China. As such, we expect the shares to be weak in the near term, until the market gets comfortable around improving trends with the iPhone 7 product cycle. That said, we do not view the quarter as thesis-changing longer term, and maintain our Buy rating. In particular, we are encouraged by (1) Apple’s new disclosure that its iPhone installed base is up 80% vs. 2 years ago, coupled with evidence in our US survey of significant pent-up demand for the iPhone 7, and (2) the acceleration in reported services growth to 20% yoy, with gross services up 27% – evidence of increasing monetization of Apple’s platform. We now estimate 41mn iPhone units in F3Q, compared to prior GS/consensus at 47mn/44mn, with about a 2mn impact from the channel inventory reduction. We lower our FY16-18 sales estimates by 8%-9% on lower units/ASPs, and our EPS estimates by 11%- 14% to $8.40/$10.53/$11.42 on the additional impact of lower margins. We lower our 12-month price target to $136 from $155, based on 12.5X CY17 EPS (previously 15X on CY16E EPS), reflecting lower growth. Risks include product cycle execution, end demand, competition, and a slower pace of innovation.
Much more in the full article here.
MacDailyNews Take: We must first progress beyond the initial stage of irrational pessimism before any semblance of actual reality can be seen by some.