stock will decline significantly as iPhone sales will falter early next year, according to Maxim Group.
In September, the company launched the iPhone 11, iPhone 11 Pro, and iPhone 11 Pro Max. Those new models have faster processors, improved camera quality, and better battery life.
Apple shares (ticker: AAPL) have risen more than 65% year to date as investors are anticipating rising profitability because of the company’s strategic shift to services. On Oct. 30, the company reported better-than-expected earnings for its fiscal fourth quarter due to strong services and wearables revenue—even as iPhone sales fell 9% year over year.
Maxim Group analyst Nehal Chokshi on Thursday lowered his rating for Apple to Sell from Hold, predicting weaker iPhone sales in the company’s March quarter. The analyst initiated a $190 price target for Apple stock.
Our “proprietary survey data & analysis lead us to expect 14% below consensus iPhone revenue in F2Q20 (Mar) and 6% below for FY20,” Chokshi wrote. For Apple’s fiscal 2020, “we expect operating profit to decline y/y due to our below consensus iPhone view, despite ongoing growth in services and wearables.”
Apple didn’t immediately respond to a request for comment on the report.
The analyst cited his firm’s survey of 610 U.S. consumers and analysis of previous iPhone cycles for his demand predictions. While he expects iPhone sales to return to growth in fiscal 2021 due to 5G-enabled devices, Chokshi said the upside is already discounted in Apple’s valuation.
“Applying peak multiples to peak AAPL earnings (i.e. 5G cycle) is unjustified, in our view,” he wrote.
Last month, Barron’s suggested it may be too early to assess the success of this year’s iPhone lineup due to price discounting and a staggered release schedule versus 2018. We compared the situation to the iPhone 6S cycle in 2015, when sales faltered after a strong start.
Apple stock was down 0.4%, at $263.32, in recent trading. The
was down 0.1%.
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