UBS cuts AAPL target price by $15 over low iPhone XR demand, component order cuts

Posted:
in AAPL Investors
UBS has cut its price target for Apple by $15 to $225 after revising its estimates, citing reported supply chain cuts and potentially tough market conditions for iPhone XR forecasts caused by the dollar appreciating against currencies in other key markets.




Recent reported reductions in iPhone production have apparently been observed by UBS, a note from analyst Timothy Arcuri seen by AppleInsiderclaims, which has led to the firm reducing its estimates for iPhone production. Originally set at around 63 million units for the new iPhone models, the cut of between 6 million and 7 million units is noted by Arcuri to be less severe as what the supply chain reports would imply.

The sales estimate reduction is being applied evenly to UBS' expectations for the iPhone XS Max and iPhone XR. The cut in total is slightly offset by an increase of sales of older iPhone models by a few million, keeping sales figures relatively high, but cutting earnings down.

The company's overall iPhone units estimate for the current quarter are down from 75 million to 73.5 million, down 3 percent from the same period last year, and with the average selling price (ASP) of $825 a minor reduction from a previous prediction of $832. Shipments in the following two quarters are also expected to be below previous expectations by the firm, with the 46.7 million and 37.5 million respective shipments down from original expectations of 53.3 million and 41.7 million, as well as representing year-on-year contractions of 11 percent and 9 percent.

On the iPhone XR forecast cuts, Arcuri suggests it is more a placeholder with "additional downside risk on a rolling basis." The first calendar quarter of 2019's unit predictions were hit harder due to the "likelihood that we hear news of more cuts in coming weeks."

New expectations for iPhone XR shipments are 28 million for the current quarter, down 1 million from earlier forecasts, while the first and second quarters now expect 13 million and 12 million units shipped, down from 17 million and 15 million respectively. This represents a cut of 8 million units across all three quarters.

Part of this is suggested to be due to the belief Apple "Continues to face FX headwinds," namely the US dollar continuing to be high relative to some other global currencies. For China, the exchange rate and news from the supply chain "suggests many consumers are opting for high-end models with similar specs from local competitors rather than the iPhone XR," writes Arcuri.

Due to the possibility of increased cuts, UBS has cut its price-earnings multiples and a lower expected earnings per share, which in turn brings the AAPL target down from $240 to $225. Despite the $15 target cut, Arcuri claims the value is still enough to justify classifying it as a "Buy" rather than downgrading the shares.
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Comments

  • Reply 1 of 32
    Welp Apple stock down 2.4% today, over 10% in the past 5 days. Market cap below $900B now. Less than $100B between Apple and Microsoft. At what point is Apple in correction territory?
    edited November 14
  • Reply 2 of 32
    I laugh at these fucking idiots on Wall Street, they've anthropomorphized the iPhone XR into the iPhone 5c reincarnated! That was a dismal failure too, yet went on to be a HUGE seller for Apple!

    My wife just upgraded from her venerable 6S+ to the Xr, and LOVES it, and around her office, 6 more people bought an Xr just by playing with her new Xr!

    These asshats should be taken over the coals by the SEC, if they actually had any balls left to do it!
    yojimbo007albegarcsamno
  • Reply 3 of 32
    Apple must love the analysts and how their dubious component supplier based prediction lower the stock price allowing them to buy back more for less. Wonder what the news will say once Apple finally removes a significant amount of the outstanding stock from the market.
    edited November 14 anton zuykovyojimbo007magman1979albegarcpscooter63
  • Reply 4 of 32
    UniconUnicon Posts: 1unconfirmed, member
    The stock is $187. BUY BUY BUY!!!
    anton zuykovandrewj5790fastasleep
  • Reply 5 of 32
    omasou said:
    Apple must love the analysts and how their dubious component supplier based prediction lower the stock price allowing them to buy back more for less. Wonder what the news will say once Apple finally removes a significant amount of the outstanding stock from the market.
    They will say that despite the worst news about the company and the terrible state it is in, some anal-ists still say that there is a slight potential for growth. And then when it goes 10-20%, they will just ignore it. It is not a hard job to be a ((journalist)) these days, or ((analyst)), as there is very little demand from the general public to get facts or solid analysis. And because of the business model that operates on click-bait that is being so widely spread these days among MSM, there is zero intensive to be doing any investigative journalism anyway! Sensationalist bullshit is the way to go, obviously.
  • Reply 6 of 32
    Unicon said:
    The stock is $187. BUY BUY BUY!!!
    MSM: Apple stock 187 - bye bye bye
    Normal people: Apple stock 187 - BUY BUY BUY!!!
    fastasleep
  • Reply 7 of 32
    Tim and Luca are laughing all the way to the bank with these discounts for their buyback initiative .. i dont think they expected it.
    magman1979albegarcanton zuykov
  • Reply 8 of 32
    Tim and Luca are laughing all the way to the bank with these discounts for their buyback initiative .. i dont think they expected it.

    I guess but if I was an Apple employee I wouldn’t like it, especially if they offer some sort of employee stock purchase program. Also can’t be too great for morale. These are time times the company needs a better narrative. It’s not a quiet period. Tim could have done some interviews with CNBC or whomever to better explain Apple’s thinking on no longer reporting unit sales and how Wall Street should look at the company going forward. Instead Wall Street is still obsessed with quarterly iPhone unit growth and punishes the stock whenever there are rumors suggesting that metric might not be so great.
    yojimbo007
  • Reply 9 of 32
    Tim and Luca are laughing all the way to the bank with these discounts for their buyback initiative .. i dont think they expected it.

    I guess but if I was an Apple employee I wouldn’t like it, especially if they offer some sort of employee stock purchase program. Also can’t be too great for morale. These are time times the company needs a better narrative. It’s not a quiet period. Tim could have done some interviews with CNBC or whomever to better explain Apple’s thinking on no longer reporting unit sales and how Wall Street should look at the company going forward. Instead Wall Street is still obsessed with quarterly iPhone unit growth and punishes the stock whenever there are rumors suggesting that metric might not be so great.
    How long have you been following Apple? News always needs something negative to say about Apple. Now that Microsoft FUD is over they need to talk about how poorly products are selling. Employees? They're probably laughing too.
  • Reply 10 of 32
    omasou said:
    Tim and Luca are laughing all the way to the bank with these discounts for their buyback initiative .. i dont think they expected it.

    I guess but if I was an Apple employee I wouldn’t like it, especially if they offer some sort of employee stock purchase program. Also can’t be too great for morale. These are time times the company needs a better narrative. It’s not a quiet period. Tim could have done some interviews with CNBC or whomever to better explain Apple’s thinking on no longer reporting unit sales and how Wall Street should look at the company going forward. Instead Wall Street is still obsessed with quarterly iPhone unit growth and punishes the stock whenever there are rumors suggesting that metric might not be so great.
    How long have you been following Apple? News always needs something negative to say about Apple. Now that Microsoft FUD is over they need to talk about how poorly products are selling. Employees? They're probably laughing too.
    I work for a large corporation. If it lost over $100B in market cap in 5 days no employees would be laughing about it.
    muthuk_vanalingam
  • Reply 11 of 32
    omasou said:
    Tim and Luca are laughing all the way to the bank with these discounts for their buyback initiative .. i dont think they expected it.

    I guess but if I was an Apple employee I wouldn’t like it, especially if they offer some sort of employee stock purchase program. Also can’t be too great for morale. These are time times the company needs a better narrative. It’s not a quiet period. Tim could have done some interviews with CNBC or whomever to better explain Apple’s thinking on no longer reporting unit sales and how Wall Street should look at the company going forward. Instead Wall Street is still obsessed with quarterly iPhone unit growth and punishes the stock whenever there are rumors suggesting that metric might not be so great.
    How long have you been following Apple? News always needs something negative to say about Apple. Now that Microsoft FUD is over they need to talk about how poorly products are selling. Employees? They're probably laughing too.
    I work for a large corporation. If it lost over $100B in market cap in 5 days no employees would be laughing about it.
    You don't loose a penny until you sell. They're laughing b/c they know it's FUD.
    edited November 14 pscooter63
  • Reply 12 of 32
    I laugh at these fucking idiots on Wall Street, they've anthropomorphized the iPhone XR into the iPhone 5c reincarnated! That was a dismal failure too, yet went on to be a HUGE seller for Apple!

    My wife just upgraded from her venerable 6S+ to the Xr, and LOVES it, and around her office, 6 more people bought an Xr just by playing with her new Xr!

    These asshats should be taken over the coals by the SEC, if they actually had any balls left to do it!
    I’m always fascinated by these kinds of defensive posts, followed by anecdotes with how many people they’ve seen purchasing said product. Conversely, I haven’t seen anybody with an XR in the wild. Unless you have a lot of money riding on this, it’ll be okay. Let the market play out and see where the chips actually fall. 
  • Reply 13 of 32
    omasou said:
    Apple must love the analysts and how their dubious component supplier based prediction lower the stock price allowing them to buy back more for less. Wonder what the news will say once Apple finally removes a significant amount of the outstanding stock from the market.
    Don’t think for a second that Berkshire Hathaway isn’t all over AAPL.
  • Reply 14 of 32
    AAPL should just take advantage of this and buy back more shares. While analysts will keep chasing iPhone numbers
  • Reply 15 of 32
    samno said:
    AAPL should just take advantage of this and buy back more shares. While analysts will keep chasing iPhone numbers
    Buybacks are planned in advance, from what I've heard. There would be too much incentive to tank their own stock, then buy it back en masse otherwise. Huge conflict of interest.
    muthuk_vanalingam
  • Reply 16 of 32
    omasou said:
    omasou said:
    Tim and Luca are laughing all the way to the bank with these discounts for their buyback initiative .. i dont think they expected it.

    I guess but if I was an Apple employee I wouldn’t like it, especially if they offer some sort of employee stock purchase program. Also can’t be too great for morale. These are time times the company needs a better narrative. It’s not a quiet period. Tim could have done some interviews with CNBC or whomever to better explain Apple’s thinking on no longer reporting unit sales and how Wall Street should look at the company going forward. Instead Wall Street is still obsessed with quarterly iPhone unit growth and punishes the stock whenever there are rumors suggesting that metric might not be so great.
    How long have you been following Apple? News always needs something negative to say about Apple. Now that Microsoft FUD is over they need to talk about how poorly products are selling. Employees? They're probably laughing too.
    I work for a large corporation. If it lost over $100B in market cap in 5 days no employees would be laughing about it.
    You don't loose a penny until you sell. They're laughing b/c they know it's FUD.
    Not everybody hangs on to their stock forever. It’s not a quiet period. Tim Cook could give an interview or signal to call out this FUD without directly referencing a specific “rumor”. He did it once before with Jim Cramer.
  • Reply 17 of 32
    wood1208wood1208 Posts: 1,644member
    Do these analysts loose their job if grossly wrong ? They should but probably not otherwise in last few years they would be out of job predicting all wrong on AAPL.
  • Reply 18 of 32
    samno said:
    AAPL should just take advantage of this and buy back more shares. While analysts will keep chasing iPhone numbers
    Buybacks are planned in advance, from what I've heard. There would be too much incentive to tank their own stock, then buy it back en masse otherwise. Huge conflict of interest.
    Well, there is no gun put to their head - outside of quiet period they may or may not buy back any shares. Thus its not exactly they will publish schedule of buy time and amount etc ahead per my understanding. Thus day to day variation is possible
  • Reply 19 of 32
    atomic101 said:
    I laugh at these fucking idiots on Wall Street, they've anthropomorphized the iPhone XR into the iPhone 5c reincarnated! That was a dismal failure too, yet went on to be a HUGE seller for Apple!

    My wife just upgraded from her venerable 6S+ to the Xr, and LOVES it, and around her office, 6 more people bought an Xr just by playing with her new Xr!

    These asshats should be taken over the coals by the SEC, if they actually had any balls left to do it!
    I’m always fascinated by these kinds of defensive posts, followed by anecdotes with how many people they’ve seen purchasing said product. Conversely, I haven’t seen anybody with an XR in the wild. Unless you have a lot of money riding on this, it’ll be okay. Let the market play out and see where the chips actually fall. 
    I’m always fascinated by these kinds of posts where, because they don’t see “anybody with an XR in the wild”, they discard offhand anyone professing the opposite....
  • Reply 20 of 32
    sacto joe said:
    atomic101 said:
    I laugh at these fucking idiots on Wall Street, they've anthropomorphized the iPhone XR into the iPhone 5c reincarnated! That was a dismal failure too, yet went on to be a HUGE seller for Apple!

    My wife just upgraded from her venerable 6S+ to the Xr, and LOVES it, and around her office, 6 more people bought an Xr just by playing with her new Xr!

    These asshats should be taken over the coals by the SEC, if they actually had any balls left to do it!
    I’m always fascinated by these kinds of defensive posts, followed by anecdotes with how many people they’ve seen purchasing said product. Conversely, I haven’t seen anybody with an XR in the wild. Unless you have a lot of money riding on this, it’ll be okay. Let the market play out and see where the chips actually fall. 
    I’m always fascinated by these kinds of posts where, because they don’t see “anybody with an XR in the wild”, they discard offhand anyone professing the opposite....
    Merely pointing out the flimsiness of this argument. Saying that one sees others buying a product holds about as much weight for the big picture as an argument that claims nobody is buying them.  “My mom and her friends ALL bought product X, thus, product X is a wild success and to heck with the facts and figures that might say otherwise”.  It’s less believable when emotion comes through in the argument, as if they have something really riding on it. 
    muthuk_vanalingam
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