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Morgan Stanley Slashes iPhone Sales Estimates

Apple CEO Tim Cook may be bullish about his company, but Morgan Stanley Analyst Katy Huberty sure isn’t.

This might be a bit of a shock since, as a Fortune article notes, it was less than two months ago that Huberty listed Apple’s iPhone sales as one of its strengths — landing it onto Morgan Stanley’s “Best Idea” list.

Now, however, it appears Huberty is throwing in the towel on Apple, citing China’s heavily saturated market and rising prices abroad. Because China has been such a strong driver for Apple and iPhone in the past year alone, this could cause a hit to Cook’s empire. He noted in the company’s third quarter earnings that China was rapidly becoming one of Apple’s top markets for iPhone sales, which is what likely got analysts bullish on sales projections initially.

And with the iPhone being Apple’s top revenue driver, the projected China slump could weigh heavily on the company, Huberty suggested. IPhone sales were once poised to grow 6.8 percent in Apple’s 2016 fiscal year, but the most updated numbers project them to flip and fall 5.7 percent. What will cause a drop in the quarters, of course, is the fact that the next few quarters won’t have a new phone to provide the boost.

The estimate for next calendar year is that Apple’s iPhone sales will dip 2.9 percent to 224,000 units, which is below the early projections by about 33 million for fiscal year 2016 and off by 28 million for calendar year 2016. As a result of the shifting tide for what could come for Apple, Morgan Stanley lowered its Apple price target by 12 percent.

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