Apple will face bigger challenges as ‘China bites even more,’ HSBC says (AAPL)
Analysts who turned negative onApple in December — before the company’ssales warning butlong after Wall Street andsuppliers began cautioning investors — are doubling down on their cautious view of the iPhone giant.
“Although we had expected challenges for Apple in China and other economies, the intensity has surprised us to the downside,” HSBC analysts led by Erwan Rambourg told clients Wednesday in a report called, “China bites even more.”
As a result of both China-specific concerns and consumers shifting views of the iPhone, Rambourg and his team slashed their price target on the stock for a second time in two months, from $200 to $160 per share. They also cut both their revenue estimates for 2019 to 2021 by 5-7% and their net income estimates by 8-9%.
Rambourg thinks it will be difficult for Apple to “dramatically” raise its iPhone average selling price (ASP) in the coming years. The iPhone’s ASP has long been cited as an issue for Apple, especially since it’s climbed as interest in the product has begun to wane.
“Over the past 10 years, Apple’s iPhone ASP has increased a dramatic +$220, or 40%, reflecting its growing value to both consumer and business markets, but nearly HALF of all that just came in FY18 alone, making a period of digestion now likely,” Robert Cihra, an analyst at Guggenheim,said in November.
The firm had previously taken its recommendation on the stock from “buy” to “hold,” calling for lackluster growth in emerging markets, a saturated smartphone market, and what it called peak iPhone growth.
Apple last weeksaid that its quarterly revenue would come in more than 7% below expectations. The announcement sent Apple sharesplummeting, drewdozens of stock price target reductionsacross Wall Street, caused a ripple effect across global markets, and inspired renewed calls for a more widespread economic slowdown.
“China situation remains complex; patents disputes adds to the headwinds: China – which accounted for 20% of total Apple’s revenue (hardware + services) in FY18 – remains important for Apple,” HSBC said. “The US-China trade tensions appear to have not just impacted the Chinese economy, but also consumers’ attitude towards Apple products.”
Separately, the Nikkei Asian Review reported Wednesday that Apple was cutting iPhone production by 10% for the next three months. The reported development is a sign Apple was expecting to take a bigger hit this year, according to the publication.
Apple shares have plunged 34% since hitting a record high of $233.47 in October.
原文 : Business Insider