Apple Shares Dip After Rosenblatt Downgrade

For the second time in as many trading days, Apple Inc. AAPL received a sell-side downgrade.

The Analyst

Rosenblatt Securities' Jun Zhang downgraded Apple from Buy to Neutral with an unchanged $200 price target.

The Thesis

The bullish case for Apple can no longer be justified as higher iPhone average selling prices (ASP) led by the iPhone Max won't be sufficient to offset weaker volume in the back half of 2019, CNBC reported the analyst as saying in a note.

Management's guidance for the calendar fourth quarter reflects the analyst's cautious stance of weaker than expected sell-through and production reductions for the higher-end iPhone XS and iPhone XR. In addition, Apple is likely to reduce its iPhone production rate by six million units.

Rosenblatt's downgrade follows a report from Nikkei Asian Review which cited unnamed sources and claims Apple told two of its smartphone assemblers, Foxconn and Pegatron, to stop adding production lines for the iPhone XR model. The publication said Apple's move could translate to 100,000 fewer phones manufactured per day by Foxconn alone.

Price Action

Shares of Apple were trading lower by 3.7 percent to $199.78 at time of publication.

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