Analyst downgrades Apple stock, because iPhone X is too popular

Posted:
in iPhone
New Street Research drops iPhone down to "sell," arguing that the iPhone X's popularity will negatively impact the upgrade cycle. It's a striking reversal from the analyst conventional wisdom of just a few months ago.

iPhone X


Throughout the spring of this year, multiple analysts were expressing skepticism about Apple due to allegedly soft demand for the iPhone X. Now, one analyst has downgraded Apple for the opposite reason -- the iPhone X has become too popular, and that is somehow a problem.

Analyst Pierre Ferragu of New Street Research this week issued a downgrade of Apple stock to "sell," because he believes purchasers of the iPhone X will likely hurt the upgrade cycle down the road.

"We expect a material disappointment in 2019," Ferragu said, as cited by CNBC. "The iPhone X has been very successful and well received by consumers. It has been so successful, that we think it has brought forward demand."

Ferragu set a price target of $165, down from the previous level of $170 -- far below its current stock price of around $215. His call is also significantly below the way most analysts see iPhone demand heading this year and next.

Ferragu went on to predict that the iPhone X upgrades will create an "air pocket" that won't be offset by the popular of the 2018 phones, even if one of them is lower-cost.

While Apple does not separate out iPhone sales by models, the company sold 41.3 million iPhones in the third quarter, with Tim Cook announcing that the X was the most popular iPhone during Q3.

The average selling price (ASP) of the iPhone rose to $724.12 from the year before, although it was down from the first quarter's $796.42, when the iPhone X was newer.

Throughout March and April, several analysts -- including Morgan Stanley's Katy Huberty -- saw weakness on the horizon for Apple's stock, due largely to what was perceived at the time as soft iPhone X demand. But Apple beat earnings estimates in Q2, sending the company on the path to its stock price reaching $200 and, the same week, becoming the first company to reach a $1 trillion valuation.
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Comments

  • Reply 1 of 39
    emig647emig647 Posts: 2,413member
    This may not be related to this particular case, but I have seen it plenty in the past. I'm ignorant to a lot of the laws and rules surrounding trading and the general market, but can someone explain to me why it is ok for analysts to clearly put out false pretense to clearly manipulate stock? 
    tribalogicaljmey267jeffharrislovemnlordjohnwhorfinviclauyycchasmchaickamagman1979pscooter63
  • Reply 2 of 39
    I'll believe him if and only if he actually shorts the stock at the range he is forecasting. Otherwise, fuggedaboudit....
    watto_cobra
  • Reply 3 of 39
    emig647 said:
    This may not be related to this particular case, but I have seen it plenty in the past. I'm ignorant to a lot of the laws and rules surrounding trading and the general market, but can someone explain to me why it is ok for analysts to clearly put out false pretense to clearly manipulate stock? 
    It is not okay per se, but there a case of plausible deniability here. Did the guy said it because he was intending on manipulating the stock, or did he say it because he is a moron? You can't punish a person for being stupid, and it is very hard to prove that he indeed did that with the intent of manipulating the stock.
    yojimbo007watto_cobra
  • Reply 4 of 39
    Paraphrasing Yogi Berra:  Nobody buys iPhones anymore -- they're too popular!
    tmaydewmelovemnlordjohnwhorfinslprescottmike1racerhomie3magman1979caladanianradarthekat
  • Reply 5 of 39
    jdgazjdgaz Posts: 357member
    CNBC, the business channel that hates America and American made goods, gave this clown airtime yesterday.
    racerhomie3claire1yojimbo007watto_cobra
  • Reply 6 of 39
    alanhalanh Posts: 41member
    In your strapline - "New Street Research drops iPhone down to "sell," ". Clearly wrong, iPhone should read AAPL.
    magman1979
  • Reply 7 of 39
    mknelsonmknelson Posts: 362member
    Might as well see if we can cause the stock to drop before the September announcements, eh?
    watto_cobra
  • Reply 8 of 39
    He has a degree in BSDS, Bachelor of Science in Dumb & Stupidity....why do this guy gets paid for saying things w no data to prove his story?
    chaickamagman1979claire1watto_cobra
  • Reply 9 of 39
    gutengelgutengel Posts: 318member
    The iPhoneX is selling to well, Apple is DOOOOOOOMED!
    jmey267racerhomie3magman1979caladanianmwhitewatto_cobra
  • Reply 10 of 39
    dewmedewme Posts: 2,124member
    So, to follow this logic it’s been the long overdue for an update Mac Mini that’s been propping up Apple’s stock price. Very nice! 
    chasmpscooter63watto_cobra
  • Reply 11 of 39
    Mind boggling. Not only does he not have the slightest hint of data, current or even historical, to back it up, but his argument doesn't even begin to make the slightest sense. What a dufus.
    jmey267magman1979pscooter63watto_cobra
  • Reply 12 of 39
    chasmchasm Posts: 1,643member
    Remind me again why the various Apple News sites give anal-cysts any airtime at all? Their collective track records are appalling.
    magman1979watto_cobra
  • Reply 13 of 39
    bigmac2bigmac2 Posts: 637member
  • Reply 14 of 39
    looks like maybe he's shorting the stock?
    watto_cobra
  • Reply 15 of 39
    rogifan_newrogifan_new Posts: 4,151member
    Just when you thought Wall Street couldn’t get dumber...
    magman1979caladanian
  • Reply 16 of 39
    MadtigerMadtiger Posts: 235member
    Well, without these dumbass analysts, i would not have been able to buy a lot of Apple stocks.  
    watto_cobra
  • Reply 17 of 39
    Here it comes! Been waiting for the influx of downgrades before the announcement to increase by stake.
    watto_cobra
  • Reply 18 of 39
    chaickachaicka Posts: 134member
    I am seriously laughing at journalism nowadays...

    Here’s some facts just looking at a small sampling size (around 20 family and close buddies):

    75% still on iPhone 7 and before.
    15% on iPhone 8/8 Plus (due to cost of X, including my partner)
    10% on iPhone X (including me)

    What’s the estimate of them upgrading to the next iPhone (2018)?
    watto_cobra
  • Reply 19 of 39
    horvatichorvatic Posts: 132member
    That's just ridiculous!

    watto_cobra
  • Reply 20 of 39
    JWSCJWSC Posts: 501member
    emig647 said:
    ... can someone explain to me why it is ok for analysts to clearly put out false pretense to clearly manipulate stock? 
    No.  Because it isn’t OK.  That simple enough for ya?
    watto_cobra
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