Deutsche Bank Lowers Price Target on Apple

In a note out over the weekend, Deutsche Bank analyst Sherri Scribner lowered the price target on Apple AAPL from 126.44 to 125 while maintaining a Hold rating. Ms. Scribner sees modest iPhone upside in the third quarter and expects sales to slow. While she looks for upside to iPhone again this quarter and raised estimates to reflect higher iPhone sales, with the iPhone refresh entering its fourth full quarter, she expects market share to moderate, with Apple's growth to underperform the overall smartphone market next year. Some of the key takeaways from the report: -Phone shipments to impress again; Watch remains a wildcard -More iPhone upside, but peaking market share levels are waning -Apple's market outperformance is unsustainable -Overall smartphone market is slowing In the note, Ms. Scribner goes on to say: "We expect growth rates for iPhone to continue to moderate. New iPhone sales help drive outperformance versus the market, but after you acquire a customer, your sales are based on how often customers refresh their phones. In general, this refresh cycle is 2-2.5 years for smartphones." "Apple has traded at an average forward P/E of 13x since 2010 with a range of 9x to 20x. We believe shares should trade in line with historical multiples and, because of its large market cap (3-4% of the S&P 500), should trade at a modest discount to the market. Our price target is based on shares trading at 13x our FY-16E EPS." Shares of AAPL are trading slightly lower in pre-market trade at 125.40, just above the revised 125 price target.