KeyBanc analyst: Apple iPhone demand has ‘potential for ongoing weakness’

Eric J. Savitz for Barrons:

KeyBanc analyst Andy Hargreaves today repeated his Sector Weight rating on Apple stock, while trimming his estimates for both earnings and iPhone sales.

He writes in a research note that checks with supply­ chain partners find that orders for iPhone components in the second half are down by 10 million units compared with a year ago. Hargreaves adds that there is “potential for ongoing weakness” through the sales cycle of fiscal 2020 (ending September), given “relatively modest hardware updates, stagnant global demand, and the potential for ongoing impairment to demand in China.”

He has a fair­ value estimate of $195… Hargreaves trimmed his EPS forecast for fiscal 2020 to $12.61, from $12.85, and now sees iPhone unit growth for the fiscal year at 2%, down from a previously projected 5%. His revenue forecast for the fiscal year drops by $5 billion to $263 billion. Street consensus revenue and EPS estimates for fiscal 2020 are at $268.8 billion and $12.65, respectively.

MacDailyNews Take: Meanwhile, AAPL rises on renewed optimism over U.S.-China trade talks and 2020 looms large with the Mother of all Super Cycles, thanks to iPhone 5G. Apple somehow just has to get through the 2019 iPhone cycle creatively. We wouldn’t bet against a post-warning and now fully-focused Apple C-Suite.

2 Comments

  1. Yes, of course Apple shows weakness based on lackluster iPhone demand. That won’t ever change, so analysts can use boilerplate text for that bit of information. I’d say it was pure desperation hoping for a 2020 Mother of all Supercycles. By then, nearly every flagship Android smartphone will have 5G chips and most consumers won’t be waiting for the iPhone version which will likely top $1000 in price. Apple really needs to depend on something other than increasing iPhone sales. It’s unfortunate Wall Street doesn’t seem very excited about Apple’s Services unless iPhone sales increase. No matter what, Apple seems to be tied to iPhone sales one way or another. It sure would be nice if the new Mac Pro is a sales success. High demand for CTO $35,000 Mac Pros could really give a bit of a boost in revenue.

    1. There could be a bright future for them if Apple designs Apple TV+ to be accessible on non-Apple platforms like their competition. Apple is still behind in legacy content and new compelling titles in contrast to Netflix, Disney/Hulu, and Amazon. Price is also an important factor in this crowded field.

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