Apple (NASDAQ:AAPL) was hit with two harsh assessments on Tuesday that serve to further define the company’s increasingly negative growth narrative.
While Jefferies analyst Peter Misek reiterated his hold rating on the iPhone maker and maintained his firm’s price target of $420, his commentary showed increased concerns for Apple’s smartphone market share.
In his report, seen by Benzinga, Misek wrote, “Our in-depth global analysis of smartphone markets, incomes, and ecosystem strength by country concludes that most incremental smartphone growth will come” at a price point less than $200. Given that fact, a $350 to $450 iPhone may be too expensive, he said, adding that iPhone profits likely peaked in the second half of 2012. Weakness in global demand for the iPhone “introduces risk” to Jefferies’ estimates for Apple’s 2014 fiscal year, which are already set 20 percent below the Street’s predictions for earnings per share. He cited the company’s tightening gross margins and a belief that iPhone sales will fall by 15 percent, year over year, as the reason for the firm’s much-lower forecast…
Goldman Sachs showed a much greater concern for Apple’s future profitability when the firm downgraded the company’s shares from a Conviction Buy to a mere Buy investment rating on Tuesday morning. This change is significant as the firm kept the higher rating for months as Apple’s stock fell from its height of $705 per share to just $428 — the price at which the stock closed at on Monday. Goldman was finally prompted to change its opinion on the iPhone maker because the company has not produced the market share and new user growth that it had expected, reported StreetInsider.
Not only did Goldman Sachs removed the company from its Conviction Buy List, but the firm also cut its price target from $660 to $575.
On a positive note, the firm did note that Apple’s platform-centric business model has enabled its cash flows and installed base loyalty to be far more resilient than traditional hardware-centric companies.
So far on Tuesday, Apple’s shares have managed to remain in the black on the stock chart — despite ongoing criticism — and buck their five-day downward slide that pushed down the stock by $33, or 7.14 percent.
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