Reduce Apple Edges as Goldman Sours on iPhone predictions, lower price target

Apple Inc. (AAPL) shares were down on Tuesday after analysts at Goldman Sachs lowered their estimate for iPhone sales and group sales for the 2019 fiscal year of the technology giant.

Goldman lowered the overall iPhone sales forecast for the full year by 6% and accelerated the estimated revenue by 3.5%, after one of Apple's leading suppliers, Lumentum Holdings (LITE), announced a profit warning on Monday that nearly a third of the component closed the market value of the maker and caused a 5% decline for Apple, which led the Dow Jones Industrial Average to a tailing point of 500 points. Goldman also lowered its price target on Apple from $ 222 per share to $ 209.

"We are worried that the demand for new iPhone models is getting worse," wrote Goldman analysts. "Although Apple may have considered some weakness in its guidance, we believe that the timing and magnitude of the LITE reduction suggests … incrementally poorer demand data."

Apple's shares fell 0.2% Tuesday to $ 193.77. The share had previously been traded moderately higher in the session.

Lumentum, which supplies 3D chips for the Apple iPhone face recognition system, said sales in the current quarter would be $ 335 million to $ 355 million, and non-GAAP EPS would reach a range of $ 1.15 to $ 1.34. , well below the initial forecast of $ 405 million to $ 430 million and $ 1.60 to $ 1.70, which had been issued just 11 days earlier.

"Recently, we received a request from one of our largest industrial and consumer customers for laser diodes for 3D detection to significantly reduce their shipments during our fiscal second quarter for previously placed orders originally planned for delivery during the quarter," said CEO Alan Lowe. "With our proven ability to deliver large volumes, years of experience, hundreds of millions of devices in the field and new product and customer funnel, we continue to have confidence in our leading position in the burgeoning market for laser diodes for 3D detection."

Earlier in the month, another Apple retailer, Japan Display, making LCD displays, its revenue growth and full-year forecast for the year after the six-month consecutive quarterly loss of 4.7 billion yen ($ 413 million) for the three months ending in September.

Last week, Apple shares were hit by a Nikkei business report daily, which said that the main Taiwan-based suppliers have asked Foxconn and Pegatron to stop the new production capacity until they get more clarity about Apple's iPhone XR demand .

The reports followed a decision by Apple to stop providing detailed figures for the sale of its individual products, such as iPhones and Mac computers, meaning that investors can no longer calculate their average sales price, an important measure used to company. profitability.

The decision to remove this guidance, as well as the December December sales of approximately $ 91 billion over the three months ended December, overshadowed a stronger than expected September quarter with better than expected earnings of $ 2.91 per share and group was expected revenues of $ 62.9 billion, and shares sent tumbled more than 6.3% Friday, the largest one-day decline since 2014.

"The lack of transparency is disappointing and is likely to limit the investor's visibility in the company," said Tim Long of BMO Capital Markets. "Our position remains that units may not grow at all and that while (average sales prices) are still rising, they will ever rise."

Apple launched the 6.1-inch LCD version of its iPhone, the XR, in early September around $ 750 as a cheaper alternative to the more expensive iPhone XS, the XS Max, which starts at $ 1,000 and $ 1,100 respectively.

"Although we expect the new line-up to not increase unit volume growth to the level of the iPhone 6 cycle, sales due to a continued rise in average sales prices would still be very healthy. With iPhone customers in the middle segment who are likely to upgrade to the XR and premium buyers who are likely to opt for the new iPhone XS Max (top models cost $ 1,450), "said Trefis analysts.

Apple said it moved 46.9 million iPhones in the course of the three months ending September, a figure broadly in line with analysts' forecasts, but was flattered by a much stronger than expected average retail price of $ 793, which the $ 751 consensus reached and increased by 28.3% over the same period last year.

Turnover from services, including App Store, Apple Music, iCloud Storage and Apple Pay sales, rose 27% to $ 10 billion, but slowed from the 31% recorded in the quarter of June, a easing that may have been impacted by the lower pace of sales of iPhones. that reduces the so-called installed base.

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