From a note to clients by Deutsche Bank’s Sherri Scribner that landed in my inbox Tuesday:
Recent datapoints on iPhone sales continue to point to weaker-than-expected demand for the new iPhone models (X, 8 and 8+). This is not a surprise to us. We have been arguing since last February that iPhone demand expectations were too optimistic and that the higher price of new models would pressure unit demand. This appears to be playing out, with numerous Asian supply chain data points suggesting iPhone production plans are being cut. While we expect AAPL’s Dec Q results will be roughly in line, we think Consensus numbers for the March and June quarters remain too high. Thus far, AAPL’s shares have not reflected lower-than-expected iPhone demand, as the stock has been helped by the strong markets and passive investment strategies. However, we expect shares to re-rate modestly lower over the next few quarters as iPhone numbers disappoint. With support from strong markets offset by weakening fundamentals, we see shares as fairly valued in the low-$150 range.
Maintains hold and $152 price target.
My take: Consensus numbers for the March and June quarters may indeed be too high, as Schribner has been warning for nearly a year, but her market-low $152 price target still seems too low.