How did Goldman Sachs’ top Apple analyst become the Street’s doomsayer-in-chief?
From a note to clients that landed on my desktop last Friday:
CAICT data for November handset shipments in China came in weak again with overall shipments at 29.6m down 15% Y/Y, but up 13% M/M. Within that, shipments from international brands (we believe a majority were likely from Apple) were 6.9m in November (+99% Y/Y and +18% Q/Q), up from 1.8m/5.8m units in Sept/Oct.
We remind investors that the iPhone 12 & 12 Pro became available on Oct 30, whereas the iPhone 12 mini & 12 Pro Max began available on Nov 13. The aggregate of international brands shipments for the past 3 months to November was 14.5m units which is only flat Y/Y.
This is in the context of what we believe are consensus expectations for higher Apple growth in China driven by 5G adoption. In our opinion, the overall market weakness that we continue to see in China may be beginning to translate into higher end demand stagnation at Apple.
We also note that lower end market strength in China is important for absorption of refurbished/2nd hand iPhones which could have a negative effect on device resale pricing and the trade-in value that new iPhone buyers experience.
Maintains Sell rating and (soaking wet) $75 price target.
Cue Exhibits 4 and 5 (click to enlarge):
My take: This note, which slipped by me last week, is the fourth I’ve seen based on the same Chinese government data. It’s the only one that found, in a 99% Y/Y bump, a negative effect on iPhone resale values.