Citing iPhone 5s yields & iPhone 5c pricing, Jefferies lowers Apple target to $425
Apple's addition of a biometric sensor to the iPhone 5s may very well have differentiated its new high-end devices from its peers and predecessors, but apparent unit production issues have caused one firm to lower its price target on Apple stock.
Global investment banking firm Jefferies released a report on Friday that lowers drops its price target for shares of AAPL from $450 to $425. Jefferies' own channel checks indicate that Apple suppliers have begun receiving build plan cuts, indicating that Apple will be producing perhaps seven million fewer iPhone 5s models in the fourth quarter than had previously been expected.
The firm places the blame on two factors, one of which is Touch ID. Jefferies' channel checks indicate that production yields on the fingerprint sensor Apple included in the 5s "have been terrible."
The other technological improvements in the device, like the M7 motion coprocessor, are said to be providing no problems. The A7 processor is reportedly made using the same process as its predecessor, leaving the Touch ID sensor as the likely culprit.
Jefferies' assessment jibes with previous statements from well-connected KGI Securities analyst Ming-Chi Kuo. Kuo has been predicting short supply of the iPhone 5s since July, due to production issues surrounding the Touch ID sensor. Kuo, though, expects production to pick up after an initial period of limited availability.
The other factor in Jefferies' price downgrade is the price point Apple chose for its iPhone 5c. The idea that Apple was preparing a lower-cost phone had been generally accepted since early this year, but analysts, investors, and Apple fans were anxious to see just where the iPhone maker would price its new, polycarbonate-backed device.
Jefferies argues that the 5c is "priced like Apple's prior generation handsets rather than to a new level," essentially saying that Apple needed to go even lower on price.
The new report is the latest in a string of downgrades from analysts disappointed that Apple did not step more aggressively into the mid-tier pricing market with the iPhone 5. Many market watchers had been hoping that Apple would price the device around $400 off-contract, and many of those subsequently downgraded the stock when Apple did not do so. Credit Suisse, Bank of America Merrill Lynch, and UBS all cut their ratings on AAPL from "buy" to "neutral."
Global investment banking firm Jefferies released a report on Friday that lowers drops its price target for shares of AAPL from $450 to $425. Jefferies' own channel checks indicate that Apple suppliers have begun receiving build plan cuts, indicating that Apple will be producing perhaps seven million fewer iPhone 5s models in the fourth quarter than had previously been expected.
The firm places the blame on two factors, one of which is Touch ID. Jefferies' channel checks indicate that production yields on the fingerprint sensor Apple included in the 5s "have been terrible."
The other technological improvements in the device, like the M7 motion coprocessor, are said to be providing no problems. The A7 processor is reportedly made using the same process as its predecessor, leaving the Touch ID sensor as the likely culprit.
Jefferies' assessment jibes with previous statements from well-connected KGI Securities analyst Ming-Chi Kuo. Kuo has been predicting short supply of the iPhone 5s since July, due to production issues surrounding the Touch ID sensor. Kuo, though, expects production to pick up after an initial period of limited availability.
The other factor in Jefferies' price downgrade is the price point Apple chose for its iPhone 5c. The idea that Apple was preparing a lower-cost phone had been generally accepted since early this year, but analysts, investors, and Apple fans were anxious to see just where the iPhone maker would price its new, polycarbonate-backed device.
Jefferies argues that the 5c is "priced like Apple's prior generation handsets rather than to a new level," essentially saying that Apple needed to go even lower on price.
The new report is the latest in a string of downgrades from analysts disappointed that Apple did not step more aggressively into the mid-tier pricing market with the iPhone 5. Many market watchers had been hoping that Apple would price the device around $400 off-contract, and many of those subsequently downgraded the stock when Apple did not do so. Credit Suisse, Bank of America Merrill Lynch, and UBS all cut their ratings on AAPL from "buy" to "neutral."
Comments
Yeah, right. "Jeffries", you're an idiot.
Yet the yields on troll analysts are at an all time high.
Global investment banking firm Jefferies released a report on Friday that lowers drops its price target for shares of AAPL from $450 to $425.
Two things, first "lowers drops" is a term I'm not familiar with.
Second, this explains why no pre-ordering of iPhone 5S. They don't have enough to fulfill pre-order demand.
I hope they get it resolved soon. I want my iPhone 5S now!
That would explain why Apple is taking pre-orders for the 5c but not the 5s.
Unless someone has another theory?
Do you really believe a "serious" production issue would be solved in one week? Jeffries knows nothing.
425??? that's their target for a companies that makes more money from phones than everyone else together, more from computers than the top5 oems together, 10x more from iPads than anyone else together?
What a bunch of incompetent, ignorant, foolish and stupid people.
Same for AI to give them their 15 minutes.
Here we go again. Last year the 5 was the most difficult phone to mass produce.
... and, although the 5 sold well, there were inventory shortages and Apple could possibly have sold even more.
That and wanting data on which colors are popular so they know better how to stock the stores. For instance the yellow version now has a shipping date of 9/25. The others are still 9/20.
Do you really believe a "serious" production issue would be solved in one week? Jeffries knows nothing.
Unless they want to ensure retail inventory on introduction day.
/s
That and wanting data on which colors are popular so they know better how to stock the stores. For instance the yellow version now has a shipping date of 9/25. The others are still 9/20.
Yellow??!! That was my least favorite color followed by green.
OK... to make my theory correct I'll just pretend that Apple agreed with me and didn't make too many of the yellow phones.
? Do Ferrari make and sell a compact entry level car to compete with the Nissan Micra (or equivalent) coz I would guarantee I would buy one if they did. Do Ferrari want me as a customer, HELL no !! to much bother
Somebody wants to buy cheap...
Jefferies is Peter Misek, right? Google /misek track record/.
Yellow is a favorite with Philipinos. Remember Corazon Aquino only wore yellow. That's a lot of iPhones.
Look at his previous records on AAPL and BBRY and then even think about considering his BS
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I love the fact that such people exists. Contrarian trades work easily!