From Barbara Kollmeyer's "Apple price target cut to $175 at Citi, which offers five reasons to keep buying the stock" posted Wednesday on MarketWatch:
Supply-chain concerns are “manageable” for Apple, given the fact the June quarter is seasonally slow anyway, while worsening FX headwinds and the company’s Russia exit will likely have an incremental effect on growth, said analysts Jim Suva and Asiya Merchant in a note to clients that published on Wednesday.
“A more concerning metric is the potential for lengthening device replacement cycles (currently at approximately 4 years for smartphones) amid consumer spending contraction in an inflationary/recessionary environment that could compress annual iPhone shipments and drive lower units as consumers await a major iPhone redesign, which we believe is unlikely until 2023 with the foldable,” said the analysts.
As for why to keep buying the stock, they offer the following reasons:
- The iPhone 14 build is expected to launch Sept. 14, with a foldable phone seen in 2023
- A mix shift that continues to skew away from lower-priced Android phones toward mid-end and premium priced products
- Apple’s plans to buy back around $90 billion in stock
- “Sticky” services revenue and potential for more devices-as-a-service offering
- New product launches such as AR/VR headsets and the Apple Car in 2025, neither reflected in current estimates and market cap.
Maintains Buy rating. Lowers price target to $175 from $200.
My take: The double-digit cuts continue. Citi follows KeyBanc (to $173), Goldman Sachs ($130) and Monness Crespi Hardt ($174).