Citi slices Apple target $25 to $175

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:

    1. The iPhone 14 build is expected to launch Sept. 14, with a foldable phone seen in 2023
    2. A mix shift that continues to skew away from lower-priced Android phones toward mid-end and premium priced products
    3. Apple’s plans to buy back around $90 billion in stock
    4. “Sticky” services revenue and potential for more devices-as-a-service offering
    5. 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).

9 Comments

  1. Fred Stein said:
    Analysts lower, and raise, their targets for AAPL, after the market has made a clear move down or up.

    After this round of lowering ends, the stock goes back up for good.

    1
    July 13, 2022
  2. Greg Lippert said:
    Consumers are NOT waiting for a foldable iPhone. Sheesh!

    4
    July 13, 2022
    • Bart Yee said:
      @Greg Agree wholeheartedly!!

      Currently, Apple is selling 230+M iPhones annually and shows little sign of material slowdown. Samsung has yet to reveal true numbers but let’s assume the analysts’ number to be true and they’ve sold roughly ~8-10M Flex + Fold models combined. And the other Android Foldables are maybe another 1M.

      So what kind of vast market is this, yet? Likely the Android Foldables market is constrained simply by the number of Android centric people willing to fork out $1000-1700 list retail for a Samsung Foldable. Similarly, the supposedly good sales of the Galaxy S22 Ultra (nee Note 22) are “fantastic” at around 11M, best showing for the largest Samsung flagship in 5 years. Big whooop for both.

      Consider that many feel Apple has a loser on its hands when the iPhone 12 and 13 minis fail to crack the 10-12M annual sales marks. Sure, there may be a considerably larger group of well heeled Apple users willing to shell out $1300+ for an iPhone foldable, maybe to the tune of 10+M per year. But in light of production costs, especially the continually evolving / improving bendable display (likely Samsung or BOE), battery tech and parts / chips availability needed, plus current macroeconomic forces potentially competing for or constraining even mid to upper end consumer spending, I suspect Apple will wait and wait for a more auspicious time for both the market AND the foldable product (in terms of quality, reliability, costs, and profitability) to match up before committing to production of any kind. Until Apple’s entry into the Foldables market and truly validates it, that market will likely remain niche unless a breakthrough in costs bring the prices into sub-$900 range.

      As some general managers say, sometimes the best move is the move you don’t make.

      2
      July 13, 2022
      • Steven Philips said:
        “How about a nice game of chess?” 🙂

        0
        July 13, 2022
  3. Gregg Thurman said:
    If you are a buy and hold forever investor, you buy because of Apple’s very long history of multi-digit growth in its user base, not because of near term catalysts, just as you don’t sell because of short term macro events that drive MARKETS down.

    Moving in and out of equities only benefits Wall Street, not the investor. Therefore, ignore the noise (including the analysts) and sleep easy at night.

    4
    July 13, 2022
    • Bart Yee said:
      @Gregg Thurman
      Hi Gregg, good to see you posting again!! Agree, even though we’ve been through a rough patch from ATH’s back in January, we are roughly where we were a year ago and through October 2021. Most of us and Apple were wearily weathering the pandemic’s effects with cautious optimism ahead, and we still felt good about Apple/AAPL’s future in time. And yes, most Apple long term investors slept well then, and still sleep well now. Of course, there’s some “lost” profits from January perspective but judicious personal finance management can mitigate much of that.

      If AAPL still hits / exceeds consensus price targets of around $175-180 in 6-12 months, most of us would be quite pleased.

      1
      July 13, 2022
    • David Emery said:
      Yeah, it’s like “Where else would you put your money?” 😉

      2
      July 13, 2022
  4. Michael Goldfeder said:
    @Gregg: Welcome back. I’m looking forward to your weekly options transactions even though I don’t utilize them. But I appreciate the information and am learning quite a bit from your strategy. Thank you.

    The foldable phone isn’t needed IMO.

    2
    July 13, 2022

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