Goldman Sachs sees iPhone sales tanking 36%, says sell AAPL shares

Posted:
in AAPL Investors edited April 2020
Veering on the side of caution, investment bank Goldman Sachs said Friday it's cutting its rating and price target on shares of Apple amid mounting uncertainty over the impact of COVID-19 on near-term consumer spending on items such as iPhones.

Apple's iPhone 11 and iPhone 11 Pro may need to make it a few extra months, if the
Apple's iPhone 11 and iPhone 11 Pro may need to make it a few extra months, if the "iPhone 12" is later than expected


In a note to investors, analyst Rod Hall cited a variety of risks factors that he believes may ultimately weigh on the iPhone maker, including the a lack of international travel to facilitate timely product launches and a looming recession with an unpredictable trajectory of recovery, all induced by the coronavirus pandemic.

"After two further GDP growth cuts from the GS Economics team and with much of the world in lockdown we are downgrading our rating to sell and reducing our Apple forecasts for a third time since February 17," he wrote.

Hall is now modeling a much sharper reduction in iPhone unit demand through mid-2020 with his view that a recovery will be shallow heading into 2021. The analyst also expressed concerns that the "iPhone 12" could see delays due to international travel restrictions, which could further impact Apple's financial perspectives.

"Limited global travel at this crucial point in Apple's 2020 iPhone final engineering and production process could result in a delayed launch this year," he said.

Meanwhile, Hall also predicts the macro economic situation could lead to stagnant Services growth in 2021 as consumers pull back on discretionary spending.

"We also assume some lingering ASP weakness as consumers look to economize similar to what we have seen in prior downturns," he said. "In addition to this we believe that Services growth slows substantially in 2021 and that Services as a percentage of revenue actually stagnates in that year."

All said, Goldman is now modeling for a 36% decline in iPhone unit demand during the third quarter and a 24% decline in the first half of calendar year 2020.

"Ultimately, we believe Apple is a mature cyclical company that is likely to trade in a calls range relative to the broader market," he said. "Because of that our view tends to be increasingly positive when we believe consensus earnings expectations for the company are overly pessimistic on a 24- month basis."

Hall cut his rating on shares of AAPL to "sell" from "neutral" while guiding down his twelve-month price target to $233 from $250. It's the analyst's third consecutive cut on the company's shares since February 17.

The downgrade on Apple to a sell rating is also the first from a major investment bank in recent times. In a surprising return to its Wall Street "darling" status, Apple shares had surged some 130% in the twelve months leading up to the COVID-19 crisis with many firms playing a constant game of catchup when it came to setting new target projections.

Shares of Apple were trading at $284.20 pre-market on the NASDAQ. This follows upbeat, after-hours comments from Apple CEO Tim Cook on Thursday regarding a gradual return to retail operations.
«1

Comments

  • Reply 1 of 26
    radarthekatradarthekat Posts: 3,354moderator
    Short-term run rabbit thinking.  From what considers itself to be a world-class investment bank.  Just blew that reputation.  
    rotateleftbyteSpamSandwichBeatsrob53netroxScot1rossb2
  • Reply 2 of 26
    jffdxjffdx Posts: 10member
    This from the same numbskull that predicted Apple’s TV+ giveaway would have a dire “material impact” on earnings. 
    edited April 2020 jasenj1
  • Reply 3 of 26
    red oakred oak Posts: 873member
    How is it possible Ron Hall still has a job at Goldman Sachs?    

    The man has the worst track record regarding Apple of any analyst on Wall Street
    SpamSandwich
  • Reply 4 of 26
    ibillibill Posts: 400member
    Buy high, sell low?
    Beats
  • Reply 5 of 26
    FolioFolio Posts: 698member
    "A mature cyclical company". Haha, like Ford and Caterpillar? Is Rod Hall auditioning for stand up now?
    lordjohnwhorfinjasenj1
  • Reply 6 of 26
    Goldman Sachs? The people who manage the Apple Card credit card, that I just bought two iPhone SEs with today?
    cpsrolordjohnwhorfin
  • Reply 7 of 26
    SpamSandwichSpamSandwich Posts: 33,408member
    Sounds like a attempt at reverse psychology.
  • Reply 8 of 26
    red oakred oak Posts: 873member
    A little birdie tells me Hall should talk to his colleagues at Goldman managing the Apple Card to see how that is going  ;)
    lordjohnwhorfin
  • Reply 9 of 26
    cpsrocpsro Posts: 2,832member
    mactodd said:
    Goldman Sachs? The people who manage the Apple Card credit card, that I just bought two iPhone SEs with today?
    What a great partner Apple has! GS knows more than most about customer purchasing, from their inside knowledge of Apple Card activity. Is it legal for them to use and divulge derivative data? Or is there a Chinese wall between the groups at GS?
    edited April 2020
  • Reply 10 of 26
    BeatsBeats Posts: 2,408member
    What a shame Goldman. If I were Apple I would punish them after giving them the opportunity to manage the most innovative card in history.

    Fire this bozo or end this contract.

    This is why I miss Steve.
  • Reply 11 of 26
    M68000M68000 Posts: 338member
    Well,  I guess I will get slammed with my comment after reading all previous comments that seem to say everything is fine?   Have to disagree,  many people are now out of work and many others are furloughed or have cuts in their salaries.  I’m lucky to work with large company that is considered critical although many staff have been furloughed and many of us including me are dealing with at least 3 month salary reduction and oh by the way the workload stays the same or even increases.    So that being said,  buying a phone this year is near the bottom of priority list for most people regardless of phone brand.  That’s my thoughts on 2020.
    edited April 2020 flyingdpAI_lias
  • Reply 12 of 26
    rain22rain22 Posts: 132member
    Ummm... maybe Goldman Sachs didn’t see the $18 coasters Apple is going to sell for $700 to the hundreds of millions of Mac Pro owners...
    Perfect time to buy buy buy...
  • Reply 13 of 26
    jasenj1jasenj1 Posts: 922member
    I wondered why AAPL was down when the market is up today. Buying opportunity.
  • Reply 14 of 26
    looplessloopless Posts: 201member
    Can anyone say "stock market manipulation". Probably told all his buddies to go out and grab some AAPL while the going is good
    Beatsentropys
  • Reply 15 of 26
    BeatsBeats Posts: 2,408member
    sjworld said:
    Beats said:
    What a shame Goldman. If I were Apple I would punish them after giving them the opportunity to manage the most innovative card in history.

    Fire this bozo or end this contract.

    This is why I miss Steve.
    “Innovative...”

    It’s old technology. Pull Tim Cook’s meat tit out of your mouth.


    Just as iPhone/iPad/ApplePay/Siri were "old technology" until everyone else copied then it's "where the market was going anyway"!

    Love it!
  • Reply 16 of 26
    mdriftmeyermdriftmeyer Posts: 7,501member
    Only an idiot will sell. The long holders will just buy on the dip, and Goldman wants you to sell so it gets more shares at a lower price point. Hedge Funds want you to sell so they cover their positions and don't go bankrupt.
    entropys
  • Reply 17 of 26
    mdriftmeyermdriftmeyer Posts: 7,501member
    sjworld said:
    Beats said:
    What a shame Goldman. If I were Apple I would punish them after giving them the opportunity to manage the most innovative card in history.

    Fire this bozo or end this contract.

    This is why I miss Steve.
    “Innovative...”

    It’s old technology. Pull Tim Cook’s meat tit out of your mouth.

    rain22 said:
    Ummm... maybe Goldman Sachs didn’t see the $18 coasters Apple is going to sell for $700 to the hundreds of millions of Mac Pro owners...
    Perfect time to buy buy buy...
    Hundreds of million? 5,000 at best.

    The only one fantasizing about someone else's phallus is you. Goldman has a 4:1 Put to Call ratio on Apple. It's in their best interest to drive the price of the stock down towards their pre-defined price of the Put.
    SpamSandwich
  • Reply 18 of 26
    entropysentropys Posts: 3,002member
    On the one hand consumers might be a bit cautious about luxury goods and discretionary purchases.
    On the other hand businesses getting people to work from home would be buying more phones for their workers.
    The gripping hand is you can never trust whatever a market analyst says, as it is often their words are not from disinterest.
    edited April 2020
  • Reply 19 of 26
    Err, sell? Sounds like he wants to drive the price down so he could grab more shares because he missed the boat.

    just wait till we find out just how much of Apple’s $200 billion they used to buy back their shares. This baby is going to shoot the moon.

  • Reply 20 of 26
    22july201322july2013 Posts: 2,393member
    Goldman Sachs is a major subcontractor of Apple. Isn't this a conflict of interest?
Sign In or Register to comment.