One of the biggest bears on Wall Street
shares rose even further.
Lynx Equity Strategies analyst KC Rajkumar, who has long been skeptical of the growth outlook.
(tick: AAPL), cut its price target to $110 from $125 on Thursday. Its new price target is the lowest on Wall Street, with analysts’ average target of about $170.
The move comes hours before Apple’s December quarter financial results, which are due after the close of business on Thursday.
Rajkumar’s view is that there has been a disconnect between Apple’s fundamentals and investor expectations. Over the past few months, he claims, iPhone 14 demand has been clouded by long lead times for high-end models due to Covid-related supply issues at Foxconn’s Zhengzhou manufacturing facility.
But he added that as that problem has faded, “the underlying demand issues have become more apparent.”
The analyst said his gradually more negative view partly reflected an order cut from Apple supplier Foxconn. “In January, we believe orders for iPhones and Macs softened at Foxconn,” he wrote. “We believe excess inventory and a lowered demand outlook after the holiday season could lead to order cuts for the March and June quarters.”
He also sees “significant” end-end iPhone demand weakening in the US, Europe and Asia. “Our research shows lower-than-expected sales in Europe,” he wrote. “We believe European telcos have been forced to return excess iPhones due to poor holiday sales.”
He also sees “a little help” from the Mac as the slowing global economy “pushes consumers toward cheaper computers.” And he believes the company, in a slower-growth environment, could lose smartphone market share to Samsung and other Android-based devices.
“Holiday sales of Mac/iPads in the US may also not be as strong as expected as Apple had to resort to discount sales from electronics retailers,” Rajkumar said. “Easier availability of all iPhone models at US telecom stores as supply normalizes shows less-than-stellar sales.”
The analyst forecast Apple’s revenue for the fiscal year ending in September would be $369 billion, down 6.5 percent, compared with the consensus estimate of $404 billion, up 2.5 percent. For fiscal 2024, it expects a further 2.7% decline to $358 billion, while Wall Street forecasts a 1.5% increase to $410 billion. Rajkumar sees earnings per share of $5.60 in fiscal 2023 and $5.40 in fiscal 2024; Consensus calls for $6.20 this year and $6.50 next year.
Apple shares rose 3.1% to $149.92 amid a strong tech rally.
Email Eric J. Savitz at [email protected]