Amid 'Perfect Storm,' Wedbush Encourages Apple Investors To See The Forest Through The Trees

Apple Inc. AAPL has endured “the perfect storm” as of late, considering reduced December guidance, iPhone metrics and recent news surrounding China tariffs. Wedbush analysts anticipate a difficult 2019 for the tech company.

The Analyst

Daniel Ives maintained an Outperform rating and lowered Apple's price target from $310 to $275.

The Thesis

Since reporting earnings earlier this month, Apple shares have fallen 20 percent, much of which can be attributed to updated company data points that indicate lowered iPhone unit expectations going into 2019.

“We ultimately believe Apple will need to seriously contemplate pricing changes and/or design changes with the next cycle of iPhones slated for the fall of 2019," Ives wrote in a note, "to drive a surge of upgrade activity that has moved out of FY19 and into FY20 as well as significantly invest (organically and through acquisitions) in its content/services strategy over the next 12 to 18 months to drive more growth initiatives.”

In terms of repaired guidance for 2019, the company should be focused on execution, Ives said.

“The underlying goal is to get the Street to start valuing the entire business as an overall services business with hardware/iPhone purchase the first step in the ecosystem driven ARR on a given Apple customer.”

Ives said the next few months "will be a street fight between the bulls and bears," but Wedbush continues to "encourage investors to see the forest through the trees on this name and view the last month as a dark period for the name, but not the start of a broader negative trend.”

Price Action

Apple shares were trading up 1.3 percent to $176.46 before the opening bell Wednesday.

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