Rosenblatt downgrades Apple to 'sell' on middling iPhone sales

Posted:
in AAPL Investors
Analysts at Rosenblatt Securities have changed their tune about Apple's stock, downgrading it to 'sell' over the belief it will face 'fundamental deterioration" for the next year, as well as predicting disappointing iPhone sales for the second half of 2019.

iPhone XR
iPhone XR


In an investor note seen by AppleInsider, Rosenblatt Securities suggests there is "less reward for owning Apple stock" after a recent stock rebound from buybacks and stable second quarter guidance.

"We do not think Apple is a short," writes the firm, insisting Apple has "plenty of cash and a meaningful stock buyback program," but adds "We believe Apple will face fundamental deterioration over the next 6-12 months." Due to this change of heart, Rosenblatt has downgraded Apple from 'Neutral' to "Sell," but maintains its price target of $150.

New iPhone sales will be "disappointing," while iPad sales growth will slow in the second half of 2019, though the sales growth of other products like HomePod, AirPod, and Apple Watch, "may not be meaningful to support total revenue growth." Services are also not immune in Rosenblatt's estimation, with the suggestion that after strong revenue growth for the last 4 to 6 quarters, the launch of Apple Music, and Apple News+, that growth will start to decelerate.

On iPhone in particular, the iPhone XS is declared by the firm to be "one of the worst-selling iPhone models in the history of Apple." The three-model strategy has made the middle-priced device "lag way behind the other models," while the iPhone XR continues to outsell both the iPhone XS and iPhone XS Max combined.

According to Rosenblatt's sales data, overall iPhone sales were flat month-over-month from May to June, which it thinks is similar to the "weak" first six months of 2019. On production, orders for the iPhone XR are believed to have slowed for the third quarter in preparation for the ramp of new models, as well as supposed weaker Q2 sales.

"With limited upgrades for the new iPhone models in the fall and expectations of a 5G iPhone in 2020, we expect major iPhone upgrades to be pushed out to the second half of 2020," the analysts predict.

As for the Apple supply chain, Rosenblatt Seems to have similar thoughts to other analysts about the upcoming iPhone refresh.

The "iPhone XI and iPhone XI max" will have triple cameras while the "iPhone XI R" will have a dual camera, with CMOS sensors supplied from Sony. The color and sizes will not change from the current generation, but the antenna design will receive some changes to improve the signal.

Intel will remain the modem supplier before an expected switch to Qualcomm for 2020, and eventually to Apple's own design of modem. Apple's smaller, faster charger using Power Integration's 18W charging IC is likely to be used, though a backup plan sourced from Semi will also be on hand.

A new cheaper design of force touch technology may be used, and Apple is also working on their own audio code technology for the devices. For 3D sensing, which should feature some upgrades, Lumentum and Viavi are expected to maintain a high proportion of components supplied for the feature, but a diffuser from Himax may have been designed out completed.

For the 2020 iPhone, Apple is tipped to stay away from using fingerprint sensors, but will adopt a 3D sensing time-of-flight solution for enhanced 3D functionality, combining Sony's CMOS and LITE's VCSEL lasers.
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Comments

  • Reply 1 of 23
    Agree. Everyone sell. Get the stock down to $100 before Apple introduces their video streaming services, updated health apps and hardware, and the AR glasses we know are coming and will change the world more than the iPhone did. But yes, until then, let's degrade the stock to bargain prices. Please.
    cornchipfastasleepjony0
  • Reply 2 of 23
    lkrupplkrupp Posts: 7,162member
    Are analysts starting to believe their own bullshit?
  • Reply 3 of 23
    rogifan_newrogifan_new Posts: 4,143member
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    Metriacanthosaurus
  • Reply 4 of 23
    iOS_Guy80iOS_Guy80 Posts: 190member
    It’s all about the iPhone. NOT. Not one word about services and the ecosystem. Analysts do not know about the strategy called ‘long term investing.”
    StrangeDays
  • Reply 5 of 23
    DAalsethDAalseth Posts: 682member
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    It won't be for me. I don't live in a big urban area. I don't expect 5G will be here for three to five years. It might be something I look at for the phone AFTER the one I get this fall, but not this one.
  • Reply 6 of 23
    rogifan_newrogifan_new Posts: 4,143member
    iOS_Guy80 said:
    It’s all about the iPhone. NOT. Not one word about services and the ecosystem. Analysts do not know about the strategy called ‘long term investing.”
    Apparently this investor note also said services would be decelerating. Perhaps subscription fatigue is a real thing and people aren’t that eager to sign up for another subscription/streaming service. We haven’t heard much good about Apple’s News service. The last story I saw was publishers complaining that it hasn’t been great so far. Apple certainly isn’t out there touting big subscription figures. A lot of people complaining that the app isn’t great. I don’t think one can just assume Apple is going to be great at services.
    MetriacanthosaurusCarnage
  • Reply 7 of 23
    jimh2jimh2 Posts: 159member
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    Almost no one knows what 5G especially when there are still people who think GB's on a phone represents the speed. The vast majority of phone users do so for Facebook, Instagram and the like...they don't need faster anything as LTE is more than sufficient. As for this supposed insane speed increase there are no use cases (yet). Prior to LTE we were always one step behind in speed whether it be early ethernet, dialup, ISDN, DSL, early cable, etc. for getting data files, then web pages, then music, then videos, etc. Use cases did exist then

    I'd say most people think AT&T has 5G phones already (Verizon and the others will soon modify their carrier settings to show something other than reality like AT&T did). If people need a new phone they will buy one and 5G will barely move the scale for most except nerds, who will quickly find out they don't need it or it is not where they live and work. More insidious will be the new service level ($) required to get 5G service. Everyone is going to pay for the move too 5G when they do upgrade or buy a new phone. Best move might be to buy the last non-5G phone to avoid paying the premium for 5G and not getting the 1st and 2nd generation 5G phones which will not be maxed out in terms of speed. It will take time to get it right, much like it did for LTE.

    On a related note there is a 5G ad being run by Verizon touting how 5G will revolutionize medicine showing surgery being performed remotely. I can assure I won't be participating in remote surgery over a wireless connection of any type. As for those thinking it will allow doctors in 1st world countries to operate on patients in 3rd world countries they are dreaming, as those countries won't see 5G until after we have moved to the next iteration of wireless.
  • Reply 8 of 23
    avon b7avon b7 Posts: 4,053member
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    Definitely. 'How much' is impossible to know but marketers know there is one technology that will be given the big push this year and it is 5G.

    I am already getting pummeled by Vodafone marketing and Christmas isn't even on most people's horizons yet.

    5G has launched here and coverage is increasing. More carriers will go live on 5G early next year. If I were in the market for a new phone, 5G would definitely be something I'd want to know about, seeing as I won't be able to avoid the marketing. If my phone of interest wasn't a 5G phone I'd want to know how much I would be impacted. I imagine some of those who don't have a clear understanding of exactly what they want could hold off on a purchase.

    Take into account that here in Spain Vodafone isn't charging more for 5G and if you have an unlimited plan, you get unlimited data too. All new unlimited Vodafone plans get 5G thrown in for the price. It's not something that will be hard to market.

    Apple will refresh Its line in September 2020 (I'm assuming that 5G won't make it onto the 2019 refresh). There will be two marketing peaks for 5G. Christmas and MWC2020. Apple won't be near either of them so I see it as having an impact. How much is hard to gauge.
    edited July 8 Carnage
  • Reply 9 of 23
    1. No one cares about 5G. Cellular data is still cellular data and has not meaningfully changed in people's minds since 3G.

    2. Last year's iPhones were a snooze, and this year will be even worse.

    3. Services has room to grow but will not see a giant boost as a result of any of Apple's efforts. No one cares about Apple's original content, and the fact that they think anyone would is shockingly bizarre. News+ appeals to a tiny niche. Apple Arcade is a great idea (subsidized development to achieve decent apps) that is several years too late. The market for this has already been put off by mobile gaming.
    edited July 8
  • Reply 10 of 23
    SpamSandwichSpamSandwich Posts: 31,300member
    A price target of $150 when the stock is currently near $200? Why even bother giving these lousy hacks a voice? No service is being done here.
  • Reply 11 of 23
    StrangeDaysStrangeDays Posts: 8,237member
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    Despite what our resident 5G-manufacturer cheerleader says, no, not at all. Nobody cares about 5G right now as LTE is good enough for most people. The way people didn't care about LTE or NFC, which is why Apple wasn't bleeding edge in implementing those either.
  • Reply 12 of 23
    rogifan_newrogifan_new Posts: 4,143member
    avon b7 said:
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    Definitely. 'How much' is impossible to know but marketers know there is one technology that will be given the big push this year and it is 5G.

    I am already getting pummeled by Vodafone marketing and Christmas isn't even on most people's horizons yet.

    5G has launched here and coverage is increasing. More carriers will go live on 5G early next year. If I were in the market for a new phone, 5G would definitely be something I'd want to know about, seeing as I won't be able to avoid the marketing. If my phone of interest wasn't a 5G phone I'd want to know how much I would be impacted. I imagine some of those who don't have a clear understanding of exactly what they want could hold off on a purchase.

    Take into account that here in Spain Vodafone isn't charging more for 5G and if you have an unlimited plan, you get unlimited data too. All new unlimited Vodafone plans get 5G thrown in for the price. It's not something that will be hard to market.

    Apple will refresh Its line in September 2020 (I'm assuming that 5G won't make it onto the 2019 refresh). There will be two marketing peaks for 5G. Christmas and MWC2020. Apple won't be near either of them so I see it as having an impact. How much is hard ti gauge.
    I’m not convinced. I think in the tech bubble everyone is convinced 5G matters. Outside of it? Doubtful. I honestly can’t see people rushing out to buy a new phone because of 5G. Of course phone makers will be pushing it hard because lengthening upgrade cycles are bad for business.
  • Reply 13 of 23
    StrangeDaysStrangeDays Posts: 8,237member

    avon b7 said:
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    Definitely. 
    There he is! Contrary to your many stories about how popular 5G & essential is, I work enterprise technology in the US and nobody cares. 


    fastasleep
  • Reply 14 of 23
    StrangeDaysStrangeDays Posts: 8,237member
    1. No one cares about 5G. Cellular data is still cellular data and has not meaningfully changed in people's minds since 3G.

    2. Last year's iPhones were a snooze, and this year will be even worse.

    3. Services has room to grow but will not see a giant boost as a result of any of Apple's efforts. No one cares about Apple's original content, and the fact that they think anyone would is shockingly bizarre. News+ appeals to a tiny niche. Apple Arcade is a great idea (subsidized development to achieve decent apps) that is several years too late. The market for this has already been put off by mobile gaming.
    1. Correct. 

    2. If you mean that besides speed and optics improvements, phones are boring...well, you may be right. It's a mature technology. What are you expecting? Cheeseburgers coming out of the screen from holographic projectors?

    3. How could normals care about Apple entertainment programming, it's not even out yet! Normals don't even know it's a thing.
    fastasleep
  • Reply 15 of 23
    avon b7avon b7 Posts: 4,053member

    avon b7 said:
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    Definitely. 
    There he is! Contrary to your many stories about how popular 5G & essential is, I work enterprise technology in the US and nobody cares. 


    What does enterprise and technology 'not caring' have to do with my response?

    Marketing is there to make you care.

    To misquote Balmer:

    "Marketing, Marketing, Marketing!"

    Right now the marketing here is simply 5G branding. This Christmas the handset vendors will ramp up their own marketing efforts on 5G phones.

    The groundwork will have been laid and here in Spain you can expect massive promotions from Vodafone trying to get users to switch carrier (competitors won't go live on 5G until early next year).

    5G will be a factor working against Apple this year. Just as price was last year (hence those last minute 'limited time' Apple promotions which are still in place). And those promotions didn't save the day, as a profit warning was still required.

    If this year's phones don't dazzle they will be harder to sell. Remember, three years of flat sales and a profit warning.

    Strange (no pun intended) that I have made the same argument on iPhone sales over the last few years and you have always been there to try explain why I'm wrong but every time you do it, my reasoning holds up over time. 

    At the very least a price drop would help and I've lost count of the rumours that have mentioned 'cost reduction' in them, so we might see price adjustments.




  • Reply 16 of 23
    chasmchasm Posts: 1,641member
    Reminder: Rosenblatt Securities has a researchable track record as being the absolute most wrong analyst among all the analysts when it comes to AAPL. This really should be noted in any stories written about this incompetent, stock-manipulating firm.
    tmaycornchipSpamSandwichMacProbadmonk
  • Reply 17 of 23
    StrangeDaysStrangeDays Posts: 8,237member
    avon b7 said:

    avon b7 said:
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    Definitely. 
    There he is! Contrary to your many stories about how popular 5G & essential is, I work enterprise technology in the US and nobody cares. 


    What does enterprise and technology 'not caring' have to do with my response?

    Marketing is there to make you care.

    To misquote Balmer:

    "Marketing, Marketing, Marketing!"

    Right now the marketing here is simply 5G branding. This Christmas the handset vendors will ramp up their own marketing efforts on 5G phones.

    The groundwork will have been laid and here in Spain you can expect massive promotions from Vodafone trying to get users to switch carrier (competitors won't go live on 5G until early next year).

    5G will be a factor working against Apple this year. Just as price was last year (hence those last minute 'limited time' Apple promotions which are still in place). And those promotions didn't save the day, as a profit warning was still required.

    If this year's phones don't dazzle they will be harder to sell. Remember, three years of flat sales and a profit warning.

    Strange (no pun intended) that I have made the same argument on iPhone sales over the last few years and you have always been there to try explain why I'm wrong but every time you do it, my reasoning holds up over time. 

    At the very least a price drop would help and I've lost count of the rumours that have mentioned 'cost reduction' in them, so we might see price adjustments.
    Way to shift those goalposts. To the left! No, to the right!

    The topic being discussed was whether people cared about 5G, and whether enough to make decisions this fall (the DOOM narrative of the sort you peddle says Apple is making a grave error by not having 5G in 2019). I can't speak to your amazing local market, but here in the US no one gives a shit. It's not a thought in any normal's head. Even in my monkey sphere of enterprise tech nobody cares. 

    I have no idea what you're on about when it comes to your insane ideas and how no one has ever proven you wrong. The only thing you've proven to 99% of this forum is that you will shill for your chinese knockoffs at any and all costs. I suspect ulterior motivators for this, but since you will not disclose your occupation present or past I'm left to merely speculate. 
  • Reply 18 of 23
    avon b7avon b7 Posts: 4,053member
    avon b7 said:

    avon b7 said:
    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?
    Definitely. 
    There he is! Contrary to your many stories about how popular 5G & essential is, I work enterprise technology in the US and nobody cares. 


    What does enterprise and technology 'not caring' have to do with my response?

    Marketing is there to make you care.

    To misquote Balmer:

    "Marketing, Marketing, Marketing!"

    Right now the marketing here is simply 5G branding. This Christmas the handset vendors will ramp up their own marketing efforts on 5G phones.

    The groundwork will have been laid and here in Spain you can expect massive promotions from Vodafone trying to get users to switch carrier (competitors won't go live on 5G until early next year).

    5G will be a factor working against Apple this year. Just as price was last year (hence those last minute 'limited time' Apple promotions which are still in place). And those promotions didn't save the day, as a profit warning was still required.

    If this year's phones don't dazzle they will be harder to sell. Remember, three years of flat sales and a profit warning.

    Strange (no pun intended) that I have made the same argument on iPhone sales over the last few years and you have always been there to try explain why I'm wrong but every time you do it, my reasoning holds up over time. 

    At the very least a price drop would help and I've lost count of the rumours that have mentioned 'cost reduction' in them, so we might see price adjustments.
    Way to shift those goalposts. To the left! No, to the right!

    The topic being discussed was whether people cared about 5G, and whether enough to make decisions this fall (the DOOM narrative of the sort you peddle says Apple is making a grave error by not having 5G in 2019). I can't speak to your amazing local market, but here in the US no one gives a shit. It's not a thought in any normal's head. Even in my monkey sphere of enterprise tech nobody cares. 

    I have no idea what you're on about when it comes to your insane ideas and how no one has ever proven you wrong. The only thing you've proven to 99% of this forum is that you will shill for your chinese knockoffs at any and all costs. I suspect ulterior motivators for this, but since you will not disclose your occupation present or past I'm left to merely speculate. 
    Need I remind you the U.S is not the world.

    The example I gave was a local example. The same applies wherever there is 5G.

    As I said, 'marketing' is there to make you care.

    And lastly, I was responding to this observation:

    How many people even know what 5G is? Will it really be a deciding factor on whether someone buys a phone this fall?

    The response was clear and to the point. As usual. No goalposts were moved.
  • Reply 19 of 23
    SpamSandwichSpamSandwich Posts: 31,300member
    chasm said:
    Reminder: Rosenblatt Securities has a researchable track record as being the absolute most wrong analyst among all the analysts when it comes to AAPL. This really should be noted in any stories written about this incompetent, stock-manipulating firm.
    We are in agreement on this. Featuring a demonstrably wrong firm and failing to make clear that fact is a disservice and aids in the possible deliberate manipulation of the stock.
    edited July 8
  • Reply 20 of 23
    djames4242djames4242 Posts: 550member
    Apparently this investor note also said services would be decelerating. Perhaps subscription fatigue is a real thing and people aren’t that eager to sign up for another subscription/streaming service. We haven’t heard much good about Apple’s News service. The last story I saw was publishers complaining that it hasn’t been great so far. Apple certainly isn’t out there touting big subscription figures. A lot of people complaining that the app isn’t great. I don’t think one can just assume Apple is going to be great at services.
    I'll attest to the app. I was a subscriber to Texture and found it easy to find content, to subscribe to magazines, and to read those that automatically downloaded. The new app is a comparative mess. Last night I was reading an article on the trouble with Apollo 11's navigation computer (fascinating read) and I was constantly being nagged to open the magazine while I was reading it. Clicking on the overlay took me back to the magazine cover which was not helpful. I've also 'subscribed' to a number of magazines, and I don't see them all on my list regardless of which device I am using.
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