BMO downgrades Apple shares amid weak iPhone sales forecasts

According to Wall Street firm BMO Capital Markets, lacklustre iPhone demand will compel Apple to downscale its sales expectations.
The company downgraded Apple shares from ‘outperform’ to ‘market perform’ yesterday, forecasting lower than expected sales for the first quarter.

In a note to clients, analyst Tim Long said that a “weaker mix” during this quarter was likely to lower projections for March and subsequent months. He added: “We expect a meaningful guide lower when the company reports on Thursday night, on the order of $5-6 billion compared to consensus revenue estimates.”

Apple will release its latest quarterly financial results for the first quarter later today.

Long reduced his target price for Apple shares from $199 to $162.

He went on to say that BMO was particularly worried by what he called a “secular change” for the iPhone. After a decade during which selling prices regularly increased, they predict that these prices will now taper off. Long stressed that they still saw a growing iPhone user base, but cautioned: “However, without a compelling product cycle in September, we may see a slow upgrade cycle once again.”

The S&P 500 ended January 5.6% higher, while Apple’s shares dropped by 1.3%.

Investors are reportedly becoming quite worried after more than one report claimed that Apple had slashed its iPhone X production targets for the March quarter by a whopping 50%.

Earlier in January, other Wall Street analysts also downgraded the company’s shares. On 17 January, Longbow Research cut its rating, predicting that Apple will sell fewer iPhones than expected this year. While on 22 January, Atlantic Equities also slashed Apple’s share rating from ‘overweight’ to ‘neutral’, forecasting lower than expected sales during the March quarter.

On Wednesday, Apple’s shares went up by 0.4%. The company was not available for comment.

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