Wall Street stops recommending Apple safe investment: 'We can no longer recommend Apple': this is what Wall Street thinks of the apple brand after its warning on sales.
The title Apple drops this Thursday, January 3, 2019 at the opening of Wall Street after the warning on the turnover launched the day before by the giant of consumer electronics, an alert that revives the debate on its growth prospects .
This is the first time since the launch of the iPhone in 2007 that Apple issues a warning on its turnover before the publication of its quarterly accounts.
Wall Street stops recommending Apple safe investment
In the first exchanges, the action of the American group won 8.72% to 144.15 dollars at 16:00 French time, showing its largest decline in session for almost six years. The title falls to a low since July 2017.
The Apple brand took the decision Wednesday to lower its forecast of quarterly turnover, its CEO Tim Cook blaming the slowdown in iPhone sales in mainland China, whose economy suffers uncertainties related to trade tensions with the United States.
Apple now expects for its first fiscal quarter (October to December 2018) a turnover of 84 billion dollars (74 billion euros), against an initial forecast of 89 to 93 billion dollars. The consensus of analysts is $ 91.5 billion, according to Refinitiv's IBES data.
While this warning is not a complete surprise to analysts covering the value, the magnitude of the revision is greater than anticipated.
Here is what many analysts think, in alphabetical order:
Bernstein - 'The market for high-end smartphones has reached maturity.'
Bernstein's analysts are cautious that service revenue is not as strong as it might appear at first glance, due to an accounting change.
Their target price is revised to $ 160 against $ 210, with unchanged advice to "market performance".
The growth of Apple's installed base appears to have decelerated significantly in the fourth quarter, they note as well.
Regarding iPhones, Bernstein analysts are surprised that the group did not recognize the possibility that the current prices of its smartphones are "just too high". They also believe that the market for high-end smartphones has reached maturity, which poses a long-term challenge for Apple.
Jefferies - 'The magnitude of this warning suggests that it is evolving into unknown territory.'
Analysts have lowered their recommendation to "save" versus "buy", observing that the sales forecast for iPhones is well below the consensus. "Apple has not missed its goals once in years, the magnitude of this warning suggests that it evolves into unknown territory," they write, saying expect more clarity on the prospects of the group.
They estimate now at 185 million the number of iPhones that would be sold in 2019, down 10% from the previous forecast they had already revised down two weeks ago. "If we were right, it would be the first time since 2015 that Apple sells less than 200 million iPhones."
Macquarie - 'We can not recommend Apple anymore.'
For analysts Macquarie, hopes on the service division could be disappointed. They say they fear a significant slowdown in this activity from March, which would not offset the weakness of sales of iPhones.
"We're late (clearly), but we can not recommend Apple anymore." The fears over the iPhone have been confirmed, uncertainties about the extent and duration of the iPhone's problems will continue, and growth in services is likely to decline significantly, especially in activities with the highest margins, "they write in a note.
RBC - 'Solid performance in services.'
RBC analysts, for their part, confirmed their recommendation to "outperform", while lowering their price target to $ 185 from $ 220.
They underline that the performance of the group in the service business remains solid and believe that the decline in the title Thursday should bring it closer to an attractive support threshold of 140 dollars.
Apple said Wednesday night that its services business had generated $ 10.8 billion in sales in the first quarter, with record growth in all regions.
UBS - 'Looking beyond the weakness of the iPhone.'
In the same way, UBS analysts have maintained their recommendation to "buy" but lowered their price target to $ 180 from $ 210. They also put forward performance above their expectations in the services business, which is expected to grow by 20% in 2019.
"Apple could get a higher multiple once investors start looking beyond the weakness of the iPhone and the release of the margin in services will highlight the recurring benefits."