Rosenblatt cuts Apple price target to $165

Analyst Jun Zhang expects the rest of the Street will cut theirs too.

From a note to clients that landed on my desktop Thursday:

We have lowered our C1Q19 iPhone shipment estimates twice over the last two months. We currently forecast Apple will produce ~39 million units and ship ~39 million units for the March quarter. Although we are at the low end of consensus iPhone estimates, we believe the street will continue to trim down their estimates.

Currently, we believe Apple’s iPhone production will remain stable for the December and March quarters. We believe iPhone X and XR sales will be similar to iPhone XS/ Max sales during the holiday season due to promotions for the X and XR by retailers and telecom operators. After the holiday season, we expect iPhone XR and XS production to come down slightly.

iPad Pro sales have been weaker than we expected so far, which we believe is due to the price range impacting customer upgrades. Despite Apple’s pricing strategy already affecting unit growth, we do not believe the company will change its strategy in the near-term.

We expect the smartphone upgrade cycle to extend further during the transition from 4G to 5G. Despite an extended cycle, we believe the street’s estimates for Apple for FY2020 are too high. We believe the lack of iPhone shipment growth, along with tough comps for services revenues, will lead to estimates coming down.

Maintains Neutral rating, lowers price target to $165 from $200.

My take: Third time’s a charm?


  1. Robert Paul Leitao said:

    iPhone unit sales peaked in FY2015 yet analysts and the market remain obsessed with this metric. Analysts, in general, are summarily ignoring the double digit rate of growth in the installed base of device users and the positive impact on Services revenue from a broadening of the global base of users.

    Apple is delivering the highest quality handsets possible to provide a robust environment for developers and to meet the needs of enterprise users. Innovation doesn’t come cheap and Apple won’t find success in selling lesser quality, lower-priced devices. I see nothing wrong with Apple. I do see a problem with the market’s perception of the company’s business model and for that reason the share price will be pinned down in the short-term.

    Fortunately, the Street’s sentiment doesn’t drive management’s decisions. Fortunately, too, management has ample cash to repurchase shares during this pullback episode in the share price.

    December 6, 2018
    • Gregg Thurman said:

      Wouldn’t be great if “analysts” gave the real reason for their downgrades – lowered investor sentiment resulting in a lower PE, and not try to pin the reason on their purported “research” that there is something wrong with Apple’s fundamentals?

      Further, wouldn’t it be nice if “analysts” took ownership in the change to investor sentiment by their continuous negative harping on metrics that aren’t relevant, and on which they are habitually wrong?

      Not going to see that happen in my lifetime, for if they did investors would realize they don’t need them.

      December 6, 2018
  2. Fred Stein said:


    1) Transition to 5G will be slower, which is fine. It will be part of the next upgrade cycle not an extension of the current one.
    2) $165 target for near term panic may indeed happen, but makes no sense one year out.
    3) Actually his comments about iPad Pro concern me. Despite the price, it’s impressive and should sell well.

    December 6, 2018
  3. John Blackburn said:

    Downturns like there are a good reason Apple should retain a healthy amount of cash on the books, share price be damned. What’s healthy? 50B at least.

    December 6, 2018

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