Goldman Sachs cuts AAPL target, earnings forecasts on bleaker iPhone predictions

AppleInsider · June 2, 2016 3:39PM

Apple's stock value fell on Thursday morning in the wake of Goldman Sachs reducing price and earnings targets, along with its predictions for future iPhone shipments.

The bank's target for Apple stock has been cut from $136 to $124, said Goldman Sachs analyst Simona Jankowski in a memo obtained by AppleInsider. Earnings per share (EPS) forecasts for Apple's fiscal 2016, 2017, and 2018 have been shrunk to $8.39, $9.70, and $10.19, respectively, down from $8.40, $10.53, and $11.42.

Jankowski blamed the prospect of slower market growth, as well as a shift to lower average selling prices (ASPs) as Apple focuses on "emerging" markets like India. The shift will "drive a higher mix of the lower-priced iPhone SE (and its successors) relative to the higher-priced iPhone 7 (and its successors)," the analyst suggested.

Goldman Sachs's forecasts now call for only 211 million iPhone sales in 2016, instead of 212 million. The gap widens in predictions for 2017 and 2018, with new estimates of 231 million and 223 million versus previous hopes for 243 million and 251 million.

On Wednesday IDC called for Apple to ship some 227 million iPhones this year. Previously, the research firm was anticipating numbers up to 232 million.

Analysts have become increasingly pessimistic about the iPhone's potential in 2016, especially after Apple reported its first year-over-year decline for iPhone sales in the March quarter. Figures may rebound this fall once the company launches new iPhones.

jcdinkins · June 2, 2016 3:43PM

This should read "Goldman Sachs wanted to get their clients in Apple at a cheaper price."

leavingthebigg · June 2, 2016 3:51PM

jcdinkins said:

This should read "Goldman Sachs wanted to get their clients in Apple at a cheaper price."

And, how much money did Goldman Sachs bet against Apple before making this cut?

NY1822 · June 2, 2016 3:58PM

I wonder if these analysts are baking in anything other than iPhones for their 3 year earnings estimates (new products? revamped watch? tv subscription?)

slurpy · June 2, 2016 3:59PM

I guess these fucking banks couldn't stand the prospects of Apple stock returning to the 3 digits, so they're vomiting out this doom and gloom like clockwork and making these proclamations. You know what I find amazing? How criminal entities and utter failures like Goldman Sachs, who fucked over so many, and had to be bailed out, still have the power to dictate the value of the most successful company on the planet, as if their proclamations are worth anything.

Templeton · June 2, 2016 4:03PM

That is why we buy leaps.

NY1822 · June 2, 2016 4:05PM

slurpy said:

I guess these fucking banks couldn't stand the prospects of Apple stock returning to the 3 digits, so they're vomiting out this doom and gloom like clockwork and making these proclamations. You know what I find amazing? How criminal entities and utter failures like Goldman Sachs, who fucked over so many, and had to be bailed out, still have the power to dictate the value of the most successful company on the planet, as if their proclamations are worth anything.

and let's not forget Goldmans manipulation of Tesla the day before the offering

NY1822 · June 2, 2016 4:07PM

Sounds like someone got burned with their short position to me

VisualSeed · June 2, 2016 4:20PM

Who cares? I just want to know what the next iPhone that they are only going to sell a quarter billion of is going to look like.

macxpress · June 2, 2016 4:23PM

Goldman sucks...

suddenly newton · June 2, 2016 4:39PM

slurpy said:

I guess these fucking banks couldn't stand the prospects of Apple stock returning to the 3 digits, so they're vomiting out this doom and gloom like clockwork and making these proclamations. You know what I find amazing? How criminal entities and utter failures like Goldman Sachs, who fucked over so many, and had to be bailed out, still have the power to dictate the value of the most successful company on the planet, as if their proclamations are worth anything.

It's about as above-the-board as a billboard that reads: WE BUY UGLY HOMES

lkrupp · June 2, 2016 5:34PM

Unless you are heavily invested in AAPL don’t worry about it. Apple has plenty of money and plenty of time to move into other markets. Apple will still sell millions upon millions of iPhones, iPads, Macs, etc. It’s the growth issue that the Wall Street types wring their hands over. It always is. Apple isn’t going out of business, isn’t losing money, isn’t on its last leg as some pundits would have you believe. AAPL pays decent dividends now as a value stock. I’m glad Tim Cook and the Board are resisting Wall Street’s clamor for short term returns.

gatorguy · June 2, 2016 5:44PM

leavingthebigg said:

jcdinkins said:

This should read "Goldman Sachs wanted to get their clients in Apple at a cheaper price."

And, how much money did Goldman Sachs bet against Apple before making this cut?

They may (or may not) actually have some good inside information on Apple's product sales. They're the lead manager for Apple's US bond (loan) sales aren't they?

minisu1980 · June 2, 2016 5:53PM

Seems like this doom and gloom is going to continue at a minimum until the new iPhone release. I don't think it is a good idea to bet against Apple long term, however this seems like a great opportunity to earn on some put options.

dougd · June 2, 2016 5:57PM

What's more amazing is that the the market reacts to this BS

NY1822 · June 2, 2016 6:16PM

what's even more amazing is they see 26% upside and Wall Street sells off

maestro64 · June 2, 2016 6:34PM

like clock work, stock raise the analysis cut outlook so they their clients short positions can pay off and they can start the process all over again.

jungmark · June 2, 2016 8:38PM

I love how people treat analyst guesses as facts. The only fact is these analysts are guessing.

gregg thurman · June 2, 2016 10:19PM

slurpy said:

I guess these fucking banks couldn't stand the prospects of Apple stock returning to the 3 digits, so they're vomiting out this doom and gloom like clockwork and making these proclamations. You know what I find amazing? How criminal entities and utter failures like Goldman Sachs, who fucked over so many, and had to be bailed out, still have the power to dictate the value of the most successful company on the planet, as if their proclamations are worth anything.

The Fool.com published an interesting article about a week ago re: analyst iPhone prediction accuracy. The pointed out how estimates vary wildly each quarter and that even the falsely (in my opinion) Ming Chi Kuo erred by more than 4% when he famously estimated more than 71 million iPhone 6 sold in FQ1/2014, then erred by about 20% the following quarter.

The truth is that no one can accurately forecast Apple units sold on anything resembling a consistent basis. That means that getting close was a matter of luck.

I pay no mind to unit sales estimates. Th only thing I watch is management's Guidance. When management Guides YoY Net Income growth Apple beats that Guidance by and average of 4% (quarterly average going back to FQ3/2012). When management does not guide Net Income growth that beat rate drops to 1%.

Bottom line unit sales estimates are worthless revenue/net income indicators.

gregg thurman · June 2, 2016 10:22PM

jungmark said:

I love how people treat analyst guesses as facts. The only fact is these analysts are guessing.

Hooray. jungmark gets it.

sacto joe · June 3, 2016 2:12AM

gregg thurman said:

slurpy said:

I guess these fucking banks couldn't stand the prospects of Apple stock returning to the 3 digits, so they're vomiting out this doom and gloom like clockwork and making these proclamations. You know what I find amazing? How criminal entities and utter failures like Goldman Sachs, who fucked over so many, and had to be bailed out, still have the power to dictate the value of the most successful company on the planet, as if their proclamations are worth anything.

The Fool.com published an interesting article about a week ago re: analyst iPhone prediction accuracy. The pointed out how estimates vary wildly each quarter and that even the falsely (in my opinion) Ming Chi Kuo erred by more than 4% when he famously estimated more than 71 million iPhone 6 sold in FQ1/2014, then erred by about 20% the following quarter.

The truth is that no one can accurately forecast Apple units sold on anything resembling a consistent basis. That means that getting close was a matter of luck.

I pay no mind to unit sales estimates. Th only thing I watch is management's Guidance. When management Guides YoY Net Income growth Apple beats that Guidance by and average of 4% (quarterly average going back to FQ3/2012). When management does not guide Net Income growth that beat rate drops to 1%.

Bottom line unit sales estimates are worthless revenue/net income indicators.

Hey, Greg, good to see you posting here!

That's a really good point. But YOY is less important than YO2Y, IMHO. Apple's on a 2 year cycle. The year just passing was the "bad compare" year, and the year coming up is the "good compare" year. I'm looking for a Q4 fy '16 guidance that's low but an actual Q4 fy '16 that's at least 10-20% growth YO2Y, Lord willing' and the creek don't rise. I'm hoping for AAPL to come out of the doldrums after July's earnings, but if I'm right about that guidance it may not come out of the doldrums until October.

Goldman Sachs cuts AAPL target, earnings forecasts on bleaker iPhone predictions

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