JP Morgan cuts AAPL target price over iPhone 14 Pro shipment issues

Posted:
in AAPL Investors
Apple's China problems has prompted JP Morgan to moderate its December quarter expectations, trimming its price target due to long iPhone 14 Pro lead times.

iPhone 14 Pro
iPhone 14 Pro


Since the release of the 2022 iPhone, JP Morgan has issued its Apple Product Availability Tracker on a weekly basis, detailing delivery time changes for the latest models. In a note to investors seen by AppleInsider, analysts have formally acted on what they've observed.

Tuesday's note has JP Morgan "moderating our expectations" for the December quarter "on the back of the impact of the recent supply challenges faced by Apple."

The analysts refer to the COVID-related problems at Foxconn's Zhengzhou factory, which faced COVID lockdowns, fleeing workers, and riots. On December 16, Foxconn lifted most of the restrictions it put in place to limit spread of the virus.

After reducing its estimates in November over the affair, JP Morgan is revisiting volume expectations, and moderating them further in December, albeit more modestly.

"While the rapid extension of lead times for the iPhone 14 Pro / Pro Max has slowed down and in fact began to moderate in recent weeks, it still remains elevated relative to thelead times seen prior to the COVID outbreak in Zhengzhou," the note states. It adds that JPM continues to see the supply shortfall continuing through year-end and impacting the typical seasonal uptick in iPhone volumes seen in Dec-Q."

Shipment and revenue forecasts hit

Shipments for the iPhone 14 Pro and iPhone 14 Pro Max are being reduced by 4 million in aggregate, lower than the 5 million cut seen in November. There's also a forecast for iPhone and total revenues to "decline more significantly" relative to JPM's previous forecast.

Shipment volumes for the December quarter are now about 70 million for the iPhone, down from 74 million. However, the forecast for the March quarter is up 2 million to about 63 million, under expectations Apple will recover some of the unfulfilled demand from December.

Total iPhone shipments for the full year of 2023 is now forecast at 235 million, down from 237 million and representing a year-on-year decline of 5%.

The tweaked iPhone volume also puts revenue and earnings forecasts lower for December to $116 billion and $1.82, versus a previous forecast of $121 billion and $1.91. This would be year-on-year declines of 6% and 13% respectively.

While the March quarter's forecast is now up to $104 billion in revenue and $1.61 in earnings, versus a previous forecast of $102 billion and $1.55, the full year forecast is still down overall. For FY23, revenue is predicted at $405 billion and with $6.15 earnings, both down from $407 billion and $6.25 previously.

As a result, JP Morgan is moderating its target for Apple. Classed as "overweight," JPM now has a price target of $190, down from $200.

Read on AppleInsider

Comments

  • Reply 1 of 14
    JP234JP234 Posts: 789member
    I'm sticking with the $200 target.
  • Reply 2 of 14
    badmonkbadmonk Posts: 1,139member
    JP Morgan has a lot of precision in their predictions butI can say that the iPhone ProMax that I ordered last month and was predicted to be arriving on Dec 27th is now coming this week so maybe the supply chain has opened up.
    twokatmewradarthekat
  • Reply 3 of 14
    I'd be happy with anything over $150. The current sag has happened at a bad time since I need to sell a bit pretty soon. Oh well, I won't have to pay as much in taxes. Lol
  • Reply 4 of 14
    twokatmewtwokatmew Posts: 43unconfirmed, member
    badmonk said:
    JP Morgan has a lot of precision in their predictions butI can say that the iPhone ProMax that I ordered last month and was predicted to be arriving on Dec 27th is now coming this week so maybe the supply chain has opened up.
    Zollotech just reported on this today. Supplies are moving again! Some locations better than others. 
  • Reply 5 of 14
    I'd be happy with anything over $150. The current sag has happened at a bad time since I need to sell a bit pretty soon. Oh well, I won't have to pay as much in taxes. Lol
    What are your margin costs? Wouldn’t it make more sense to borrow and wait for the price to recover somewhat before selling?
  • Reply 6 of 14
    JFC_PAJFC_PA Posts: 862member
     $190, down from $200”

    Yawn. 

    Lede buried. 
    radarthekat
  • Reply 7 of 14
    danoxdanox Posts: 1,527member
    Can’t say the D word, but Apple is ok financially the fundamentals are sound and leadership stable unlike the mad billionaire of tech running a company in Fremont, California.
    edited December 2022 radarthekatJanNL
  • Reply 8 of 14
    Got my 14 Pro yesterday, 12/20. Originally promised for 12/31. 
    twokatmew
  • Reply 9 of 14
    tundraboytundraboy Posts: 1,847member
    Unless JP Morgan has any reason to believe that these 'shipment issues' are more than a transitory bump, it is stupid to let it have such an outsized effect on the stock price which is a measure of expected long term profitability.
  • Reply 10 of 14
    JP234JP234 Posts: 789member
    This is a perfect example of "trading" vs. "investing."
    Traders will act on information like this, hoping to get a jump on other traders acting on the same thing. Half will make money, half will lose.
    Investors will evaluate whether this analysis has any meaningful long term implications for the company. In this case, it does not, so they hold, and make money long term.
  • Reply 11 of 14
    JP234 said:
    This is a perfect example of "trading" vs. "investing."
    Traders will act on information like this, hoping to get a jump on other traders acting on the same thing. Half will make money, half will lose.
    Investors will evaluate whether this analysis has any meaningful long term implications for the company. In this case, it does not, so they hold, and make money long term.
    I don't think this is an example of "trading" vs "investing". I think, this is an example of "stock market manipulation".
  • Reply 12 of 14
    JP234JP234 Posts: 789member
    JP234 said:
    This is a perfect example of "trading" vs. "investing."
    Traders will act on information like this, hoping to get a jump on other traders acting on the same thing. Half will make money, half will lose.
    Investors will evaluate whether this analysis has any meaningful long term implications for the company. In this case, it does not, so they hold, and make money long term.
    I don't think this is an example of "trading" vs "investing". I think, this is an example of "stock market manipulation".
    You could say the same thing about ANY analyst opinion, on any company. But insider trading is a felony, and the only manipulation possible would involve the analyst trading shares or options BEFORE he releases the information publicly. It happens, all the time, and is hard to prosecute. But a $10 price target downgrade from 200-190 would not move the market enough to make it worth the risk. Usually it's staff inside the company who trade before publishing a big earnings surprise. I owned a printing business that printed earnings reports, and we had to sign NDAs, and guarantee to shred any "make-ready" and destroy film and plates so people couldn't raid our garbage for insider info.
  • Reply 13 of 14
    Would love to see my shares at 190! The pro max from att is scheduled to be delivered at the end of January so I cancelled them for our company as in 7-8 months the 15 will be released. May as well just skip the 14 and suspect that there are many more who will do the same. 
    JP234
  • Reply 14 of 14
    JP234JP234 Posts: 789member
    bulk001 said:
    Would love to see my shares at 190! The pro max from att is scheduled to be delivered at the end of January so I cancelled them for our company as in 7-8 months the 15 will be released. May as well just skip the 14 and suspect that there are many more who will do the same. 
    Count me as one of them. Or even later, if Apple doesn't implement USB-C in place of Lightning.
Sign In or Register to comment.