Assessment of Apple Inc. (NASDAQ:AAPL)’s supply chain has led FBR analysts to conclude that the iPhone sales will encounter speed bumps in the near-term. As a result, the analysts have lowered their various estimates for Apple, thus tempering their previous 4Q to fiscal 2017 total revenue and iPhone shipment targets.
A revolutionary iPhone 7 should enable Apple to sidestep serious headwinds in the smartphone market. It has been cited that competition in the high-end handset segment and peak smartphone penetration in developed markets will limit future iPhone sales. As such, the company needs a stronger product to tackle the predicted challenges. It appears FBR agrees with the sentiments about iPhone pressures, to an extent, based on its supply chain checks. Besides soft demand for smartphones, Apple also has tough comps to beat in this December quarter.
Despite the real and perceived challenges likely to face Apple in the near future, FBR maintains Outperform rating on the stock, but feels convinced that its other targets for the company have to be vacated.
iPhone sales targets narrowed
FBR now predicts that Apple Inc. (NASDAQ:AAPL) will ship 75.5 million iPhones and generate overall revenue of $76.7 billion in the December quarter (F1Q2016). The firm earlier predicted shipment of 77 million iPhones and revenue of $77 billion in the quarter. Despite cuts in iPhone shipments and revenue, the firm maintains its EPS estimate for Apple in the quarter at $3.24.
FBR has also stepped down its estimates for Apple Inc. (NASDAQ:AAPL)’s fiscal 2016 and 2017. The firm now predicts 223.5 million and 255 million iPhones being shipped in 2016 and 2017, down from 243 million and 259 million, respectively, as previously estimated.
In terms of revenue, FBR has narrowed its revenue/EPS estimates for 2016 and 2017 to $238.9 billion/$9.65 and 255.5 billion/$10.54. Its previous estimates were revenue/EPS of $245.8 billion/$9.80 and $261.2 billion/$10.93 for 2016 and 2017, respectively.
Because of its reduction of various Apple Inc. (NASDAQ:AAPL) estimates, FBR has also lowered its 12-month price target for Apple to $150 from $175.
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