But analyst Samik Chatterjee is sticking with his $150 price target.
From a note to clients that landed on my desktop Thursday:
In conjunction with a modest downward revision in the iPhone EMS build estimate by JPM Apple Supply Chain analyst, William Yang, and following JPM’s channel checks post Chinese New Year indicating weaker-than-expected smartphone demand, we are moderating our iPhone shipment volume estimate for both C1Q and C2Q.
While modest downward revisions in iPhone build estimates following the peak holiday quarter is not atypical, the combination of quite lackluster demand for the iPhone 12 mini (likely to be discontinued by the supply chain starting 2Q) and the first major cut to iPhone 12 Pro build shipments (which had the strongest lead times in the holiday quarter) makes us take note of a weaker demand environment, led by the combination of weaker consumer spending in China as well as a normalization of demand trends following the uptick from early 5G adopters.
Nonetheless, even as our iPhone shipment estimates for CY21 moderate from ~236 mn units to 230 mn units, it still implies 13% y/y increase in volumes in CY21, led by the 5G upgrade cycle. Additionally, despite the reduction in our iPhone volume shipment forecasts, we see only minor tweaks to our earnings estimates given the benefit from weaker USD.
Finally, relative to valuation, AAPL shares are trading at ~27x NTM P/E and investors have already acknowledged that shares might underperform near term on the combination of the valuation multiple and downward volume revisions; however, we believe given recent resilience in iPhone sales even during a pandemic, AAPL shares will continue to trade at a higher multiple through the cycle than in previous years.
Maintains Overweight rating and $150 price target.
My take: Modest downward revisions in iPhone build estimates following the peak holiday quarter are not atypical. And yet they still make news.