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:
We highlight several key thoughts below, including:
- 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,
- AirPod sales are strong and we expect some production increases,
- 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
- 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.
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.