- In his first warning on profits for more than a decade on WednesdayApple has announced that its revenues would be $ 9 billion lower than the initial forecast for the first quarter of its 2019 fiscal year.
- Wall Street analysts responded by almost universally reducing price targets.
- Some said that Apple's problems were worse than they feared, while others said that it exposed serious structural problems in society.
Apple left a bad surprise Wednesday on Wall Street, which issued its first warning on profits for more than ten years.
Apple had already told investors expect revenues of between $ 89 and $ 93 billion in the first quarter. On Wednesday, he revised this estimate to $ 84 billion, 7.6% lower than expected.
He listed a host of reasons for the slowdown, including the economic weakness of emerging markets, particularly China, where trade tensions with the United States compounded the situation.
Among the other reported problems, iPhone upgrades lower than expected, a strong US dollar and an iPhone battery replacement program were among other reported issues. You can read the full list of Apple issues here.
Analysts responded by reducing price targets almost universally. Some said that Apple's problems were worse than they feared, while others said it exposed serious structural problems in society.
The company's stock price is currently down 8.5% in pre-market trading.
Here's what Wall Street says about Apple's profit warning:
Analyst Daniel Ives did not mince his words, calling the profit warning "Apple's darkest day in the days of the iPhone".
"The magnitude of the shortfall (about 8%) with China demands that the culprit be in our opinion upsetting and weigh heavily on the shares," he said.
Ives added that it was not yet time to "declare that the growth story of the iPhone is dead in the water". "In the future, there is an installed base of 750 million active iPhones in the world, including 350 million in the window of upgrade opportunities over the past 12 years. to next 18 months, "he said.
Price target: $ 200 (instead of $ 275)
Following Apple's update, Goldman Sachs has reduced its revenue projections for the 2019 fiscal year by 6% to $ 253 billion. Apple is more sensitive to macroeconomic changes than most companies.
"We do not see any strong evidence of a slowdown in consumption in 2019, but we are simply pointing out to investors that Apple's replacement rates are likely to be much more sensitive to the macroeconomic situation now than the company's." Approaching the maximum penetration rate of the market for the iPhone, "Goldman said. Explain.
Price target: $ 140 (instead of $ 182)
Longbow took it for granted that Apple's services and new revenue from its products could avoid the problems associated with the iPhone:
"The magnitude of China's shortfall is a clear sign that the bullish thesis of the growth of new products and services with high margins and increased return on capital do not weigh enough to mitigate a substantial decline in the demand for the iPhone ".
"How far can Apple go?" was the question asked by Citi. He added that trade tensions between the United States and China were more serious than expected.
"While we have talked a lot about the negative impact of the trade tensions that have had a negative impact on the demand for Apple products in China with our iPhone and sales estimates below consensus, as detailed in our report of 10 Dec. Global Tech Views: How Low Can Apple Go ?: Trade wars are bad for technology stocks, we were surprised at the magnitude of this failure and the negative impact of Chinese demand for iPhones, "said Citi analysts.
Price target: $ 170 (instead of $ 200)
BMO Capital Markets
That was pretty much the same message from BMO. "We have been cautious about the newly launched iPhone's ability to conduct an upgrade cycle, especially in China, and the December quarter results are worse than we expected," she said. he declared.
Price target: $ 153 (instead of $ 213)
Bank of America Merrill Lynch
Merrill Lynch of the Bank of America said things could get worse for Apple. "Although trade tensions with China may be easing in the first half of 19, weak demand and slower upgrade cycles may significantly reduce the number of units in the market. in F19 (we are now modeling 181 million units against 210 million previously, "the statement added.
Price target: $ 195 (instead of $ 220)
Nomura analysts said the loss of the iPhone was "serious" and suggested that the weakness "mainly concerned the new models XS / XR". He added that Apple's problems are "partly structural, partly cyclical", but that there are "bright spots" in services and wearable technologies, like Apple Watch.
Price target: $ 175 (instead of $ 185)
"It goes without saying that Apple's negative results have far-reaching implications," said analysts, noting that companies such as Intel and Broadcom were a potential guarantee.
Price target$ 160 (instead of $ 210)
"China is following in the footsteps of the US market with longer smartphone replacement cycles, slowing overall market growth," Morgan Stanley said of China's problems at Apple.
Price target: $ 211 (instead of $ 236)