Loop Capital cuts AAPL price target to $170 over weak iPhone demand

AppleInsider

Projecting that Apple's annual revenue will decline in 2024, investment firm Loop Capital says iPhone demand is too soft.

iPhone 15 Pro colorful lineup

Other investment firms such as JP Morgan are predicting a recovery for Apple in China, while ones like Morgan Stanley, believe the company will benefit from cancelling the Apple Car. However, Loop Capital is concentrating on the iPhone, and sees only increasing problems for Apple.

Analyst Ananda Baruah says that she now believes that both Apple's overall revenue and its earnings per share, will decline in 2024. That would be the first time this has happened since 2016.

"Simply put, iPhone unit shipments are simply too soft owning to both organic demand but also to competition," said Baruah. He says that current estimates for Apple's March quarter results are at "some risk," while the June quarter earnings face a "material risk."

According to Loop Capital, Apple the average selling prices for iPhones across the range, and across the world, are flattening. Baruah says that there is lower demand in China, and that iPhone sales overall are back to pre-COVID levels.

A second Loop Capital report, this time primarily from analyst John Donovan, claimed that Apple has significantly cut its orders for the iPhone 15 range. According to Donovan, the cut is between 7% and 8%, meaning Apple now forecasts selling 199 million iPhones across 2024.

As a consequence, Loop Capital has reduced its price target from $185 to $175. Baruah does say that news of generative AI and the potential future success of the Apple Vision Pro could act as catalysts to improve Apple's position.



Read on AppleInsider

iOS_Guy80

Love it when these analyst cut Apple price it’s a great opportunity to pick up more shares at a good price. 

terabyte_1

Apple could make all of the lawsuits stop, if only they were a bit more fair and not so anti-competitive.

mikethemartian

Well the S&P500 has gone up 26.9% for the past 12 month period while Apple has only gone up 2.3% for the same period. That is only price gains though. You would also have to compare Apple’s dividend rate to the S&P500 average dividend rate.

Bart Y

Title says price target cut to $170, but the article says cut from $185 to $175.  

Which price target is correct?

In my opinion, if Loop is specifically discussing ALL iPhone production, 199M is too low or does not include iPhones already in existing wholesale and retail inventory.  US (Americas), European (including MEA and India), Japan, and Rest of Asia sales were up as was revenues in FY24Q1.  That did make up for a shortfall of iPhone sales and over all less revenues in China.  These areas are NOT suffering economic downturn woes as China is but ARE having a bumpy but roughly trending upwards bumpy post pandemic recovery.  As their economies improve, so will Apple’s hardware and services improve.

IMO, overall iPhone sales will remain in the 228-235M range, possibly more if a new iPhone SE 4 with full screen display is introduced.  The iPhone 16 with spatial photography & videography, AI enhancements, and updated A18 chips will continue to sell well.  iPhone 11 are now 4.5-5 years old this year, XS/XR are now 5+, and the X is 6+ as is the 8/8+ and older home button models except the SE 2022, so there’s still a huge reservoir of upgradeable iPhones just based on age.  Most will have had or need battery replacement at least once if not twice for peak performance.

FY2023 iPhone revenues were down $5B from 2022 at $200.6B vs $205.5B but still up substantially from FY2021’s $192B.  I expect iPhone revenues to be flat to slightly higher by 2-3% on recovering sales revenues in all but China.

Kierkegaarden

Bart Y said:

Title says price target cut to $170, but the article says cut from $185 to $175.  

Which price target is correct?

In my opinion, if Loop is specifically discussing ALL iPhone production, 199M is too low or does not include iPhones already in existing wholesale and retail inventory.  US (Americas), European (including MEA and India), Japan, and Rest of Asia sales were up as was revenues in FY24Q1.  That did make up for a shortfall of iPhone sales and over all less revenues in China.  These areas are NOT suffering economic downturn woes as China is but ARE having a bumpy but roughly trending upwards bumpy post pandemic recovery.  As their economies improve, so will Apple’s hardware and services improve.

IMO, overall iPhone sales will remain in the 228-235M range, possibly more if a new iPhone SE 4 with full screen display is introduced.  The iPhone 16 with spatial photography & videography, AI enhancements, and updated A18 chips will continue to sell well.  iPhone 11 are now 4.5-5 years old this year, XS/XR are now 5+, and the X is 6+ as is the 8/8+ and older home button models except the SE 2022, so there’s still a huge reservoir of upgradeable iPhones just based on age.  Most will have had or need battery replacement at least once if not twice for peak performance.

FY2023 iPhone revenues were down $5B from 2022 at $200.6B vs $205.5B but still up substantially from FY2021’s $192B.  I expect iPhone revenues to be flat to slightly higher by 2-3% on recovering sales revenues in all but China.

I was just about to mention the same thing — title should be simply “Loop Capital cuts Apple price target from $185 to $170” (the $170 appears to be correct according to other articles).

Interesting how Mac/iPad revenue is not mentioned at all, or anything else for that matter — just iPhone.  Not sure when next SE will be released, but this could really boost revenue.  I’m guessing this won’t come out until after iOS 18 is released, and it is possible they change routine and release the SE along with other models in the fall.  They do this with the Watch, so it shouldn’t be unusual to do this with iPhone.

zeus423

Loop Capital. That's a new one for me.

Kierkegaarden

zeus423 said:

Loop Capital. That's a new one for me.

Me too.  Maybe the CEO is Toucan Sam? 😉

avon b7

It's impossible to know but Apple did guide lower for this quarter.

There do seem to be consistent reports of a dip in demand, especially in China. 

This is another for that list:

https://displaydaily.com/apples-iphone-oled-demand-dips-by-19-as-huawei-and-xiaomi-see-surge/

jvm156

The iPhones camera wart continues to be one of the ugliest design decisions I’ve ever seen from apple and i can’t believe it’s still like this years later. As diehard of an apple fan as i am Samsung did this far more aesthetically  appearing and apple could use a change for the physical appearance of the phone

Massiveattack87

iOS_Guy80 said:

Love it when these analyst cut Apple price it’s a great opportunity to pick up more shares at a good price. 

I am not sure how you can view Apple as a good price now.. 

No growth, but x27 FWD PE. 
Apple is valued as a software company like MSFT, but cannot launch their own Gen AI on their device. 

Think again. Apple is just like KO. 

Or pray that Apple gets a new CEO like Satya Nadella. 

Massiveattack87

avon b7 said:

It's impossible to know but Apple did guide lower for this quarter.

There do seem to be consistent reports of a dip in demand, especially in China. 

This is another for that list:

https://displaydaily.com/apples-iphone-oled-demand-dips-by-19-as-huawei-and-xiaomi-see-surge/

Stone Partners (your link) is from South Korea and not from China.