Here’s the analyst’s note that took a bite out of Apple

With Apple at $270, Rosenblatt’s Jun Zhang reiterated his Street-low $150 price target. Traders took the bait, shaving $25 billion off Apple’s market cap in the space of two hours Monday.

From Zhang’s note to clients, which landed on my desktop overnight:

rosenblatt reiterates apple 150

We highlight several key thoughts below, including:

    1. iPhone 11 sales remained stable in November, while iPhone 11 Pro and iPhone 11 Max sales remained weak. We believe there have been/will be production cuts of ~25% for the iPhone 11 Pro and iPhone 11 Max for both the December and March quarters. We think total iPhone 11, Pro, and Max production will drop 60% q/q in March, as we do not believe Apple will build much 4G smartphone inventory in the first half of C2020. We expect weakness in builds into C2020,
    2. AirPod sales are strong and we expect some production increases,
    3. we expect 4 iPhone models, both 4G and 5G versions, to launch in the second half of C2020, while a 5.4-inch OLED 5G smartphone model with a dual camera may be released in the spring of C2021, and
    4. we expect Apple will lose market share in China during the transition from 4G to 5G in C2020.

With iPhone 11 sales cannibalizing high-end iPhone sales, we believe production cuts for December for the iPhone 11 Pro and Max will be a combined 3 million units and 11 production will be reduced by 1 million units.

My take: Zhang may have good sources in Apple’s Asian supply chain, but his price targets are wack. He set his current $150 target last January. Clients who followed his advice missed one of the year’s great mega-cap run-ups. See Zhang’s rating history below.

rosenblatt reiterates apple 150 Click to enlarge.

UPDATE from iMore:

Morgan Stanley analyst Katy Huberty has pushed back on Zhang, saying that production levels of the iPhone are predicted to remain steady. Huberty says that, after meeting with Apple CFO Luca Maestri and supply chain partners over the last two weeks, she is confident that demand continues to be strong for all devices, even the iPhone 11 Pro and iPhone 11 Pro Max.

See also: The Jun Zhang archives.

6 Comments

  1. Gregg Thurman said:
    To be delicate Zhang’s position regarding Apple is horse shit.

    Considering his long time history of issuing horse shit “research” papers on Apple/AAPL I want to know why so much time is given to what he vomits.

    4
    December 10, 2019
  2. Robert Harris said:
    Has he ever been positive.

    4
    December 10, 2019
    • Gregg Thurman said:
      More importantly, has he ever been right?

      5
      December 10, 2019
  3. Bruce Oran said:
    As a non finance person it is difficult for me to understand why a person who is wrong time and time again, costs his clients millions, continues to be taken seriously by Wall Street!

    My take: Fool me once, “ shame on you, fool me twice, shame on me”!

    1
    December 10, 2019
    • Steven Noyes said:
      My guess. He shifted to the Motorola Droid to run Flash. At that point he realized how behind Apple was at not adopting the cutting edge of the web and he never looked up as he is still living in 2009.

      1
      December 10, 2019
  4. Aaron Belich said:
    Why does anyone care about iPhones? They are a fixed, replacement item with a AppleID Satisfaction rating in excess of 95%. The growth is in the attachments to the iPhone, whose customer base loves adding worthwhile items it (hardware & software), some which Apple has their own, superior version for in the works, waiting for the masses to settle on what they want after playing with other company’s spitball “innovations”.

    Eventually there will be a need to supplant the iPhone, likely when we’ve moved on to some kind of cerebral implant, something that improves upon the glass mirror and doesn’t interfere with its design.

    1
    December 10, 2019

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