Analyst Continues To Cut Apple Estimates Due To iPhone Sales

An analyst believes that Apple’s fiscal third-quarter financial results will disappoint Wall Street, according to CNBC.

Bernstein analyst Toni Sacconaghi predicts that Apple’s revenue will fall in the range of $47 billion to $49 billion for its June quarter, compared to the analyst average of $51.9 billion.

“Investors are squarely focused on the health of the iPhone business, as supply chain data increasingly points to weakness. Based on our detailed analysis of supply chain companies with historically high correlations to iPhone unit sales, we revise our iPhone unit estimates [lower],” Sacconaghi wrote in a note to clients Thursday (April 26).

Sacconaghi reduced the fiscal 2018 earnings per share estimate for Apple to $10.71 from $10.93, different from the Wall Street consensus of $11.43. He also lowered his iPhone forecast for the company’s fiscal third quarter to 38.8 million units from 41 million units in lieu of the 43 million units average estimate.

“We note that buyside expectations have come down considerably in recent weeks, and while such numbers would represent materially weaker than normal iPhone seasonality, they appear to be increasingly within the range of expected outcomes,” he wrote.

He also confirmed his market perform rating on Apple shares and his $170 price target.

“There have been a lot of data points out of Asia [citing TSMC] that iPhone is weak, particularly for the iPhone X,” Sacconaghi said on CNBC’s “Halftime Report” Thursday. “We think that people are replacing their phones less frequently. … Over multiple years that replacement cycle is likely to lengthen.”

Earlier this week, it was reported that $63.9 billion of shareholder value was wiped out after a prediction of softer smartphone sales from Taiwan Semiconductor Manufacturing Co. (TSMC).

TSMC, the world’s largest contract chipmaker and a major Apple supplier, said it expects 2018 growth of 5 percent for the global semiconductor industry, lowering its prediction from an earlier forecast of 5–7 percent.

“Apple represents nearly 20 percent of TSMC’s revenue, so the outlook potentially points to weaker-than-anticipated iPhone demand,” said Atlantic Equities Analyst James Cordwell.

In addition, Mizuho Securities USA revealed that its data also points to soft demand for the iPhone X, as well as a steady fall in iPhone 8 and 8 Plus orders.