Apple stock taking a beating on analyst note predicting soft summer iPhone X demand

Posted:
in AAPL Investors edited April 2018
Apple stock, and the market, are both taking a big hit after a notable analyst predicted in "in-line" quarterly earnings report accompanied with predictions for the June quarter being lower than what Wall Street is currently expecting.

Tim Cook and Jony Ive with the iPhone X


"We expect Apple to report an in-line March quarter," Katy Huberty from Morgan Stanley wrote in a note to investors on Friday, that has been provided to AppleInsider. "But [we] are cautious into earnings on May 1 due to our belief that June quarter consensus estimates need to be revised lower."

Huberty claims iPhone supplier checks and weak data surrounding the Chinese iPhone market are the bases for her report.

However, Huberty still suggests that a dip is an opportunity to buy the stock, and that the group would be "buyers on any weakness" assuming that Services retain growth, and Apple continues its stock buyback program.

Morgan Stanley lowered its June quarter iPhone sales estimate to 34 million from 40.5 million. This stands in contrast to the 43 million average forecast by assorted Wall Street prognosticators.

Huberty lowered her price target to $200 from $203 for the company's stock. At Noon Eastern time on Friday, AAPL was priced at $166.87. The last time the stock was this low was April 2, when it closed the day at $166.68.

For the second fiscal quarter of 2018 that ended in March, Morgan Stanley predicts that Apple will report a year-over-year 3 percent growth of iPhone sales, climbing to 52.3 million phones. Revenue is expected to hit $60.2 billion with a gross margin of 38.5 percent.

Morgan Stanley iPhone predictions versus actual sales


Factors expected to impact Apple's earnings estimates for the third quarter include elevated DRAM prices, a weaker dollar than expected, and low NAND pricing. Huberty also predicts that Apple will shovel another $150 billion into stock buybacks.

Apple CEO Tim Cook has historically warned Wall Street's pundits to not read too much into supply chain checks.

"The supply chain is very complex, and we obviously have multiple sources for things," said Cook in 2014 responding to reports of dismal iPhone sales that weren't true. "Even if a particular data point were factual, it would be impossible to interpret that data point as to what it meant for our business."

Regardless if the predictions are accurate or not, fear is setting in amongst investors after a series of reports once again predicting a quarter that Apple has yet to issue guidance for. CNBC's Jim Cramer noted on the air on Friday morning that he would be "less worried about Apple after it reports."

Apple earnings, and quarterly predictions, are on May 1.
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Comments

  • Reply 1 of 35
    flydogflydog Posts: 277member
    Always a great time to buy when analysts make these ridiculous pronouncements. 
    lordjohnwhorfinandrewj5790boogerman2000anton zuykovStrangeDaysjasenj1watto_cobraequality72521jony0cornchip
  • Reply 2 of 35
    lkrupplkrupp Posts: 7,067member
    Let loose the dogs of doom!
    watto_cobracornchip
  • Reply 3 of 35
    rogifan_newrogifan_new Posts: 3,979member
    However, Huberty still suggests that a dip is an opportunity to buy the stock

    Of course. Earnings are a week and a half out. Never fail right before earnings these rumors of soft iPhone demand or production cuts surface. And it’s the same as always: this quarter is going to be OK but next quarter will be bad. Now they’re worried about June, in 3 months they’ll be saying they’re worried about September.
    mwhitejony0
  • Reply 4 of 35
    Cesar Battistini MazieroCesar Battistini Maziero Posts: 166unconfirmed, member
    Apple should enjoy this and buy as much stock as it can.

    Triple the buy back every time some "news" breaks!

    When they launch another hot product that is certainly on the works

    They will double their money!
  • Reply 5 of 35
    Cesar Battistini MazieroCesar Battistini Maziero Posts: 166unconfirmed, member
    My dream is that Apple drops Samsung entirely!

    They should start producing screens on their own factory! 

    I'm sure Jobs would go nuclear on samsung.

    They have no creativity and no character.
    watto_cobra
  • Reply 6 of 35
    I hope Apple is buying back stock whenever it dips because it seems to be heading for a lot of dips. It's annoying to always see Apple stock tanking but I suppose it could be good for long-term shareholders. I just wonder if this is part of Apple's plan to make the stock look unattractive to Wall Street or is the company becoming completely clueless as to its strengths and weaknesses. As long as Apple's value doesn't go too low and they increase the dividends more than they have in the past, I'll be satisfied. Apple is bound to improve its growth at some point in the future.

    I know I'll probably get slammed for not defending Apple, but the stock has really has become the year's worst performer on the DJI.  Am I the only one to think that Apple is an embarrassment despite sitting on so much cash?  It's as though Apple doesn't know what to do.  They don't want to update their computers in a timely fashion.  They don't want to diversify their hardware business from near total dependency on the iPhone.  They're not into any cloud business like most tech companies.  They're not into streaming video despite there being so much low-hanging fruit.  It just seems as though Apple is deliberately coasting with their business.  I'm sure Apple could be secretly doing stuff behind the scenes, but it's just so hard to tell.  It could be just part of a grand scheme but it leaves me scratching my head.
    edited April 2018
  • Reply 7 of 35
    78Bandit78Bandit Posts: 232member
    Remember the consensus estimates for Q2 turned out to be too high and had to be revised down when Apple issued their official estimates at the last earnings call.  Also, the units sold estimates for Q1 also turned out to be overestimated (82 million estimated vs. 77 million actual).  The ASP increased a lot, but without Apple breaking out actual numbers we don't know how much of that was due to the X vs. the $50 price increase of the 8 over the 7.

    It could very easily happen again.  Whether or not it is due to soft iPhone sales or something else may never be known.  It may just be overly enthusiastic analysts who have to bring their estimates back in line with reality.
    edited April 2018
  • Reply 8 of 35
    The problem with these analysts is that there's little to no accountability. Shareholders should be allowed to sue for the lost value of their stocks when the analysts' predictions turn out to be wildly wrong.
    waltgMacProwatto_cobra
  • Reply 9 of 35
    KuyangkohKuyangkoh Posts: 326member
    WOW, they get paid to wrongly predict Apple. Isn’t that manipulations or fake news? If I lost millions because of thier rumors can we file a case of slander??
    axcoatlwaltgwatto_cobra
  • Reply 10 of 35
    aknabiaknabi Posts: 159member
    Kuyangkoh said:
    WOW, they get paid to wrongly predict Apple. Isn’t that manipulations or fake news? If I lost millions because of thier rumors can we file a case of slander??
    what's slanderous about their statements... the definition of slander isn't bad news that costs me cash because I'm blinded by AAPL as a fanboy and/or only want my stock to go up.

    Man I remember the downslide in the post-Scully days and AAPL investors had a lot more rationality... but we live in a post-fact world now
    78BanditCarnage
  • Reply 11 of 35
    iPhone X in RED would of helped out!  
    sphericwatto_cobracornchip
  • Reply 12 of 35
    SpamSandwichSpamSandwich Posts: 31,098member
    Tim should double their buybacks during these times of gross stock manipulation.
    watto_cobra
  • Reply 13 of 35
    Cesar Battistini MazieroCesar Battistini Maziero Posts: 166unconfirmed, member
    That photo is gold! 

    They are very happy, holding a photo of ice-cream ahuuahuahuauhahuahuau
    watto_cobra
  • Reply 14 of 35
    seankillseankill Posts: 467member
    At some point Apple is going to find it hard to maintain their iPhone sales. With the flagships moving up in price, it just becomes less worth it to pay that amount. Not to mention the features are becoming less desired, a 30% faster processor, a marginal camera improvement, or Face ID vs Touch ID won’t impact most people enough to justify the cost. Sure I can buy a new iPhone every 2 years but why not save the cash for something that would materially impact my life, like saving. 

    Not to say iPhone sales are going to drop but the age of high growth is over. 
    edited April 2018 muthuk_vanalingam78Banditcornchip
  • Reply 15 of 35
    seankill said:
    At some point Apple is going to find it hard to maintain their iPhone sales. With the flagships moving up in price, it just becomes less worth it to pay that amount. Not to mention the features are becoming less desired, a 30% faster processor, a marginal camera improvement, or Face ID vs Touch ID won’t impact most people enough to justify the cost. Sure I can buy a new iPhone every 2 years but why not save the cash for something that would materially impact my life, like saving. 

    Not to say iPhone sales are going to drop but the age of high growth is over. 
    Most iPhone buyers are leasing their iPhones paying $35-$45 a month for two year.  After that time, they own it but anytime in between they can trade it in for a new model iPhone and up their monthly payment to do so!
    edited April 2018
  • Reply 16 of 35
    rogifan_newrogifan_new Posts: 3,979member
    seankill said:
    At some point Apple is going to find it hard to maintain their iPhone sales. With the flagships moving up in price, it just becomes less worth it to pay that amount. Not to mention the features are becoming less desired, a 30% faster processor, a marginal camera improvement, or Face ID vs Touch ID won’t impact most people enough to justify the cost. Sure I can buy a new iPhone every 2 years but why not save the cash for something that would materially impact my life, like saving. 

    Not to say iPhone sales are going to drop but the age of high growth is over. 
    Most iPhone buyers are leasing their iPhones paying $35-$45 a month for two year.  After that time, they own it but anytime in between they can trade it in for a new model iPhone and up their monthly payment to do so!
    But that’s not growth that’s just maintaining existing customers.
  • Reply 17 of 35
    axcoatlaxcoatl Posts: 20member
    Sounds as less analysis, but lots of criminal activity? SEC should check why every single quarter analysts play the same lame game. No, I do not think this is ‚normal‘. 

    @Kuyangkoh: manipulations? Take a look at the Nasdaq Option Chain, and maybe you will get confirmed. I think it is a manipulation, yes. Not the first time, that they push down Apple stock.
    edited April 2018 watto_cobra
  • Reply 18 of 35
    In October 2014, my wife and I traded up from our old 4S to the new 6 (she got a standard, I got the Plus).  Bigger screens were the major selling point with us.  We had purchased the 4S models three years earlier.  This time around (3 years after buying our 6's), we were just not compelled to buy a new iPhone 8 or X.  Lots of new goodies to be sure, but nothing compelling enough to shake us from our still-functional 6's.  Instead, we are taking advantage of Apple's $29 battery upgrades to breathe a few more years out of what we have.  I suspect we are not alone.
  • Reply 19 of 35
    wigbywigby Posts: 689member
    aknabi said:
    Kuyangkoh said:
    WOW, they get paid to wrongly predict Apple. Isn’t that manipulations or fake news? If I lost millions because of thier rumors can we file a case of slander??
    what's slanderous about their statements... the definition of slander isn't bad news that costs me cash because I'm blinded by AAPL as a fanboy and/or only want my stock to go up.

    Man I remember the downslide in the post-Scully days and AAPL investors had a lot more rationality... but we live in a post-fact world now
    In the days of Scully, there was plenty of stock manipulation behind the scenes too except it wasn't as accelerated by the current news cycle and automated by trading software that can run rings around any broker. The boiler room of analysts and investors went from a little room to an entire planet.
    watto_cobracornchip
  • Reply 20 of 35
    emoelleremoeller Posts: 439member
    Huberty has been very bullish on APPL and it is her job to report the data as she sees fit.  As investors it is our job to filter these analysts opinions in much the same way as we filter our rumors on Apple's products and services.  APPL stock was at an inflection point earlier this week as it approached its all time high, so one should have expected some volatility - it could have gone either way in my opinion.

    As for Apple buying on the dips, I don't believe they can do that (as a public company this could be viewed as stock manipulation).  Rather the Board approves a repurchase program (which I expect them to do again on May 1st) that is executed internally on a predetermined time schedule.  

    I follow the stock very closely and agree with Huberty's assessments of an "in-line" quarter and lower June Qtr guidance.  My prediction is that the Board will double their percentage increase in dividend yield (this has averaged about 11% per year so I'm expecting a 20-25% increase on May 1st), and an increase in the ongoing share buy-back program - all funded by the repatriation of offshore funds. 

    That said I purchased my first APPL shares when they first went public and have been in and out of the stock ever since.  I'm long term bullish for  APPL and believe that it will win the race to be the first $`1T market cap company in the history of the world.  But not all of their products are great and the stock is certainly not going to go straight up.   2018 is a transition year for Apple as the resources dedicated to the new Campus (which is absolutely amazing) and geo-political issues impact Apple's focus on making great products.


    urashidanantksundaram
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