Apple fell 7% in two days, but UBS is standing pat

“There is still no reason to become materially more cautious on 2021 expectations.” — Analyst Timothy Arcuri

apple down ubs stands pat From a note to clients that landed on my desktop Monday:

Amid January smartphone sales down ~37% Y/Y, iPhone was still up 5% due to easier comps. On a month/month basis, iPhone demand was down 28%, worse than normal 4yr seasonal of down ~21%. COVID-19 has clearly impacted overall sales in January but AAPL’s negative pre-announcement from last week suggests February numbers are likely to be far worse due to both supply and demand issues related to the virus outbreak – a situation so fluid that AAPL didn’t even provide a new range.

While there will have to be some channel re-stocking, the pace of recovery in June Q is more dependent on the demand side – which is very hard to predict. Even so, investors are generally more focused on the Fall launch and we believe there is still no reason to become materially more cautious on 2021 expectations – the key for the stock at this point.

Maintains Buy rating and $355 price target. 

My take: Arcuri’s calm is admirable, but I wonder if this was written before Monday’s bloodletting.

See also: Apple 3.0 COVID-19 archives.


  1. Fred Stein said:

    Still counting iPhones.

    The bull case is all the great things Apple will provide for customers over the next 5 years (and beyond), with iPhone revenue, as a percentage of Apple’s top line, decreasing. We can only guess at all the great things Apple will bring.

    The bear case is COVID 19 and the follow on macro factors. We can only guess.

    February 24, 2020
  2. Robert McDonald said:

    Breakthrough article on understanding where we are at in confronting how COVID 19 might affect markets. We are only at the beginning of this crisis:

    “The assertions that by April everything will be over, are not true.” Marc Lipsitch, epidemiologist at Harvard University.

    The economic/market concern has been expanded to include Europe centric manufacturing in northern Italy, Switzerland and Germany; and rest of Asia Japan, South Korea, Vietnam, Indonesia and Cambodia.

    I call it Phase II.

    No way I would go back into this market. Futures up 0.6%.

    February 24, 2020
    • Robert McDonald said:

      Due disclosure. I still hold Apple shares in all taxable accounts dating back to when Jobs adopted Intel microprocessors. Approximately 2006. I have sold all Apple holdings in all tax protected IRA and Charitable Remainder Trust Accounts and tentatively intend to buy it back around the next bottom. My best estimate of that is at this point is about $260 per share.

      February 25, 2020

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