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Pacific Crest Downgrades Apple, Sees $145 Fair Value; Warns Of iPhone Sales Decline in 2019

Pacific Crest Downgrades Apple, Sees $145 Fair Value; Warns Of iPhone Sales Decline in 2019

zerohedge.com / by Tyler Durden / Jun 5, 2017 6:03 AM

In a rare negative move on Apple, Pacific Crest downgraded the tech giant from Overweight to Sector Weight. As StreetInsider notes, analyst Andy Hargreaves says the upside from the iPhone 8 appears to be priced in to the stock. He tells clients in a Monday research note that the risks to Apple might not be priced in, referring to the risk that iPhone sales could potentially decline in FY 2019.

 We are downgrading AAPL to Sector Weight and recommend investors reduce position sizes. We believe AAPL anticipates strong performance in the iPhone 8 cycle, while providing relatively little weight to risks through the cycle or the potential for iPhone sales to decline in FY19.

Commenting the iPhone 8 upside first, Hargreaves says rewards from the phone are balanced against the risks: “we believe investors are anticipating an extremely strong iPhone 8 cycle, while giving relatively little weight to risks around gross margins, elasticity, supply issues, or the likelihood for declines beyond the iPhone 8 cycle. This reduces the risk/reward ratio and prompts us to downgrade our rating to Sector Weight.” He also believes that unit sale estimates required to achieve nearly $12.00 in EPS “appear extremely unlikely.”

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