Rosenblatt cuts AAPL target again, citing worries over 'Services' growth and low iPad Pro ...

Posted:
in AAPL Investors edited December 6
Analysts have started looking at the iPad Pro, and iPhone sales beyond the holiday quarter for reasons to cut Apple stock target price estimates, with a historically bearish one dramatically scaling back his target price.

iPad Pro with Smart Keyboard Folio
iPad Pro with Smart Keyboard Folio


Jun Zhang from Rosenblatt Securities claims to be seeing iPad Pro sales "weaker than we expected so far," which the analyst is blaming on the price of the device. Additionally, coupled with that, Zhang is expecting to see iPhone XR and iPhone XS production to "come down slightly" -- but in comparison to what isn't clear.

In the longer term, Zhang believes that "Apple's pricing strategy [is] already affecting unit growth," but the analyst ins't expecting a change in strategy or pricing in the near-term.

Other reasons cited for a lowering of Apple's target price on Thursday are an overall weakness in the smartphone market prior to the wide adoption of 5G, a lack of iPhone shipment growth, and his prediction of poor Services revenue growth that he appears to be standing alone in making.

In fiscal year 2020, Zhang expects little revenue growth from Apple, with a whole-year revenue expectation of $270 billion, about 7 percent lower than consensus estimates.

As a result of all of these factors, Zhang has cut Rosenblatt's Apple stock target price to $165, predicting darker days ahead. However, his claims of low iPad Pro sales seem premature -- and impossible to compare with actual figures -- plus he is the only analyst predicting slow services growth.

Historically, Zhang has under-estimated not just Apple's actual unit sales, but also the contribution of Services to Apple's bottom line. He was part of the chorus claiming that the iPhone X sales were bad -- which was proven wrong by Apple's actual sales numbers and repeated remarks by Apple that the iPhone X was the best-selling iPhone after release in 2017 and well into 2018.

Zhang's predictions is only the latest one that appear driven more by concerns that Apple will no longer report unit sales similarly to how its competitors report, more than any other factor, given that the smartphone market has been at least relatively flat for the last two years versus Apple's actual sales figures. However, Zhang's prediction for Rosenblatt is the first to prognosticate bad growth of Services revenue.

Apple is predicting a likely record-breaking holiday sales period, expecting between $88 billion and $92 billion for the holiday quarter. The 2017 holiday season resulted in $88.3 billion in revenue -- a period that analysts badly underestimated iPhone X sales.
«1

Comments

  • Reply 1 of 22
    In the long run this is good for people who want to buy into AAPL.  Zhang is just a fortune teller.  His words have no influence on what will actually happen. If you believe Apple has some great new products in the pipeline and some very good days ahead, you will have an opportunity to buy AAPL on sale.   This stuff must make options traders crazy (and some of them rich.) 
  • Reply 2 of 22
    Buyinthatdip!!
  • Reply 3 of 22
    GeorgeBMacGeorgeBMac Posts: 3,236member
    The reality is sinking in that Apple's core products are, at this point, embedded in mature markets with little growth in volume or prices.

    It's growth areas are in the Apple Watch and related health as well as (potentially) home automation and self driving cars.   Plus, of course, other products and services that haven't even been thought of -- and that could evolve from the proliferation of 5G revolutionizing communications.

    In addition, it could reinvigorate lagging, narrowly focused Mac hardware as well as exploit the power of the A series chips to let iPads challenge laptops in a serious way.

    Tim's challenge will be two fold:
    1)  Keep the innovation coming
    2)  Keep the innovation customer focused rather than on glitzy tech features.

    That second point may be critical if you compare Steve's rollout of the MacBook Air to the recent rollout of the newest MBA:   Steve focused on what it (and its technical features) would do for me and you.  It was very personal.   The girl who introduced the 2018 MBA simply read off a laundry list of technical upgrades and features:  When the highlight of your presentation is a T2 chip, its time to rethink your thrust -- at least if you're Apple. 

    Or, compare the rollout of the 2018 MBA to the introduction of LTE on the Apple Watch:  Instead of a list of technical features we got a live shot of a real person making a phone call from the middle of a lake on her paddle board using her Apple Watch.   There is a huge difference between the two:  one appeals to geeks (like me) while the other appeals to normal humans.
    Latkoelijahg
  • Reply 4 of 22
    Sucky thing is we have another month of this to go as Apple usually doesn’t report until the end of January. For me this is going to be one of the most interesting earnings calls in a while. I think we’ll know pretty quick how the quarter went based on Tim Cook’s demeanor. When Apple has good quarters he’s more upbeat on the calls.
    elijahg
  • Reply 5 of 22
    In fact I am really sick of Reuter’s and associates constantly bringing up fake numbers and rumors with little to no proof.   
    They say “Analysts says “ and then from that point on start preaching their own platform.
    Their facts are suspect rumors and conjecture.
    News should be reliable and based on facts not fiction.  Thank you .   Real News Forever !!!!
    neil andersonlatecomer
  • Reply 6 of 22
    brucemcbrucemc Posts: 1,469member
    Always buy things you would want when they are on sale.
  • Reply 7 of 22
    brucemc said:
    Always buy things you would want when they are on sale.
    In this part of the World, the words 'Apple' and 'Sale' are never seen together.
    If only we had a retailer like Adorama who would sell below list from time to time.
    jbdragon
  • Reply 8 of 22
    This story is incomplete without a critical assessment of this ananlyst’s track record. Have they been wrong before? Are they more wrong than right? Are they almost always right?
  • Reply 9 of 22
    GeorgeBMacGeorgeBMac Posts: 3,236member
    In fact I am really sick of Reuter’s and associates constantly bringing up fake numbers and rumors with little to no proof.   
    They say “Analysts says “ and then from that point on start preaching their own platform.
    Their facts are suspect rumors and conjecture.
    News should be reliable and based on facts not fiction.  Thank you .   Real News Forever !!!!
    Fake News = I don't like that news

    "Only tell me what I want to hear!"
    elijahgasdasd
  • Reply 10 of 22
    quinneyquinney Posts: 2,521member
    brucemc said:
    Always buy things you would want when they are on sale.
    In this part of the World, the words 'Apple' and 'Sale' are never seen together.
    If only we had a retailer like Adorama who would sell below list from time to time.
    He may have been referring to AAPL being on sale.
    neil anderson
  • Reply 11 of 22
    jbdragonjbdragon Posts: 1,903member
    brucemc said:
    Always buy things you would want when they are on sale.
    In this part of the World, the words 'Apple' and 'Sale' are never seen together.
    If only we had a retailer like Adorama who would sell below list from time to time.
    So it really should be Apple and USED! Apple slapping PRO onto the iPad doesn't make it so and the prices on the iPhone and iPads are really getting out of control. I want Apple to make money of course, but they're are more greedy then ever. For Tim Cook it seem Apple is all about the mighty dollar. For as much as you pay for a iPhone or iPad, why the F won't they actually include a charger that will fast charge these devices. So you spend even MORE money at Apple to buy what should have been included. I hate Android for a number of reasons, but I wish there was a real 3rd option. I would consider jumping ship. Even the newest Mac Mini. It's a nice device, but the cheapest version only has a i3 in it and it's a lot more expensive like everything else Apple. They are really starting to price themselves out of the market.
    elijahg
  • Reply 12 of 22
    jungmarkjungmark Posts: 6,568member
    Oh, it's  the "Apple is doomed" time  of year again. Oddly they complain the Apple is too iPhone dependent and then cut outlook based on the smaller parts of the company. 
    muthuk_vanalingamelijahgneil anderson
  • Reply 13 of 22
    Mike WuertheleMike Wuerthele Posts: 3,701administrator
    This story is incomplete without a critical assessment of this ananlyst’s track record. Have they been wrong before? Are they more wrong than right? Are they almost always right?
    I don't feel like you read the article.

    FTA: "Historically, Zhang has under-estimated not just Apple's actual unit sales, but also the contribution of Services to Apple's bottom line. He was part of the chorus claiming that the iPhone X sales were bad -- which was proven wrong by Apple's actual sales numbers and repeated remarks by Apple that the iPhone X was the best-selling iPhone after release in 2017 and well into 2018."
    edited December 6 muthuk_vanalingamfastasleep
  • Reply 14 of 22
    brucemcbrucemc Posts: 1,469member
    brucemc said:
    Always buy things you would want when they are on sale.
    In this part of the World, the words 'Apple' and 'Sale' are never seen together.
    If only we had a retailer like Adorama who would sell below list from time to time.
    I meant Apple shares...
    muthuk_vanalingamfastasleep
  • Reply 15 of 22
    LatkoLatko Posts: 151member
    The reality is sinking in that Apple's core products are, at this point, embedded in mature markets with little growth in volume or prices.

    It's growth areas are in the Apple Watch and related health as well as (potentially) home automation and self driving cars.   Plus, of course, other products and services that haven't even been thought of -- and that could evolve from the proliferation of 5G revolutionizing communications.

    In addition, it could reinvigorate lagging, narrowly focused Mac hardware as well as exploit the power of the A series chips to let iPads challenge laptops in a serious way.

    Tim's challenge will be two fold:
    1)  Keep the innovation coming
    2)  Keep the innovation customer focused rather than on glitzy tech features.

    That second point may be critical if you compare Steve's rollout of the MacBook Air to the recent rollout of the newest MBA:   Steve focused on what it (and its technical features) would do for me and you.  It was very personal.   The girl who introduced the 2018 MBA simply read off a laundry list of technical upgrades and features:  When the highlight of your presentation is a T2 chip, its time to rethink your thrust -- at least if you're Apple. 

    Or, compare the rollout of the 2018 MBA to the introduction of LTE on the Apple Watch:  Instead of a list of technical features we got a live shot of a real person making a phone call from the middle of a lake on her paddle board using her Apple Watch.   There is a huge difference between the two:  one appeals to geeks (like me) while the other appeals to normal humans.
    Agree 100% and I have been making these comments for 2 years now - without any effect.
    MBAir being crippled not to pale MB/MBPro says enough. Lamentation has become  a second nature, irreversibly & sadly.
    Cook has overplayed his strategy.
    Apple deserves 10x better than him. Look at  Microsoft CEO Sadella as an example.
    edited December 6 elijahg
  • Reply 16 of 22
    This story is incomplete without a critical assessment of this ananlyst’s track record. Have they been wrong before? Are they more wrong than right? Are they almost always right?
    I don't feel like you read the article.

    FTA: "Historically, Zhang has under-estimated not just Apple's actual unit sales, but also the contribution of Services to Apple's bottom line. He was part of the chorus claiming that the iPhone X sales were bad -- which was proven wrong by Apple's actual sales numbers and repeated remarks by Apple that the iPhone X was the best-selling iPhone after release in 2017 and well into 2018."
    I did read it, but that didn’t really jump out at me. I stand corrected.
    edited December 6 muthuk_vanalingam
  • Reply 17 of 22
    fastasleepfastasleep Posts: 1,963member
    jbdragon said:
    brucemc said:
    Always buy things you would want when they are on sale.
    In this part of the World, the words 'Apple' and 'Sale' are never seen together.
    If only we had a retailer like Adorama who would sell below list from time to time.
    They are really starting to price themselves out of the market.
    No, they’re not. 
    elijahg
  • Reply 18 of 22
    fastasleepfastasleep Posts: 1,963member
    Latko said:
    The reality is sinking in that Apple's core products are, at this point, embedded in mature markets with little growth in volume or prices.

    It's growth areas are in the Apple Watch and related health as well as (potentially) home automation and self driving cars.   Plus, of course, other products and services that haven't even been thought of -- and that could evolve from the proliferation of 5G revolutionizing communications.

    In addition, it could reinvigorate lagging, narrowly focused Mac hardware as well as exploit the power of the A series chips to let iPads challenge laptops in a serious way.

    Tim's challenge will be two fold:
    1)  Keep the innovation coming
    2)  Keep the innovation customer focused rather than on glitzy tech features.

    That second point may be critical if you compare Steve's rollout of the MacBook Air to the recent rollout of the newest MBA:   Steve focused on what it (and its technical features) would do for me and you.  It was very personal.   The girl who introduced the 2018 MBA simply read off a laundry list of technical upgrades and features:  When the highlight of your presentation is a T2 chip, its time to rethink your thrust -- at least if you're Apple. 

    Or, compare the rollout of the 2018 MBA to the introduction of LTE on the Apple Watch:  Instead of a list of technical features we got a live shot of a real person making a phone call from the middle of a lake on her paddle board using her Apple Watch.   There is a huge difference between the two:  one appeals to geeks (like me) while the other appeals to normal humans.
    Agree 100% and I have been making these comments for 2 years now - without any effect.
    MBAir being crippled not to pale MB/MBPro says enough. Lamentation has become  a second nature, irreversibly & sadly.
    Cook has overplayed his strategy.
    Apple deserves 10x better than him. Look at  Microsoft CEO Sadella as an example.
    How exactly is the Air “crippled”?
    elijahg
  • Reply 19 of 22
    Mike WuertheleMike Wuerthele Posts: 3,701administrator
    This story is incomplete without a critical assessment of this ananlyst’s track record. Have they been wrong before? Are they more wrong than right? Are they almost always right?
    I don't feel like you read the article.

    FTA: "Historically, Zhang has under-estimated not just Apple's actual unit sales, but also the contribution of Services to Apple's bottom line. He was part of the chorus claiming that the iPhone X sales were bad -- which was proven wrong by Apple's actual sales numbers and repeated remarks by Apple that the iPhone X was the best-selling iPhone after release in 2017 and well into 2018."
    I did read it, but that didn’t really jump out at me. I stand corrected.
    Appreciate it! I retract my previous concern :D
    edited December 6 SpamSandwich
  • Reply 20 of 22
    chasmchasm Posts: 994member
    This story is incomplete without a critical assessment of this ananlyst’s track record. Have they been wrong before? Are they more wrong than right? Are they almost always right?
    Reminder: this particular analyst has been consistently and wildly wrong all the time thus far.
    SpamSandwich
Sign In or Register to comment.