Rosenblatt Lowers Apple's Price Target To $165

Rosenblatt Securities on Nov. 5 downgraded Apple Inc. AAPL from a bullish stance, and on Thursday the firm is lowered its price target below current levels.

The Analyst

Rosenblatt Securities' Jun Zhang maintains a Neutral rating on Apple with a price target lowered from $200 to $165.

The Thesis

Apple's iPhone production is likely to remain stable for the December and March-ending quarters while iPhone X and XR sales are likely to be similar to iPhone XS and iPhone Max sales during the holiday season aided by promotional activity by retailers and telecom providers, Zhang said in a note.

Exiting the holiday season, Apple's smartphone upgrade cycle will likely last longer than expected as the iPhone's transition to 5G is likely to only take place in 2020. The longer cycle doesn't necessarily bode well for Apple, however, as current fiscal 2020 estimates are too high and estimates are likely to be revised lower.

For fiscal 2020, Zhang says Apple will likely show minimal revenue growth and Rosenblatt's estimates for $12.00 in EPS on $270 billion is $2.75 per share and 7.5 percent below the Street's estimates, respectively.

The analyst's revised $165 price target is based on a 13.75 times P/E multiple on 2020 estimates, which is justified given "potential problems" in the smartphone market.