Goldman Lowers iPhone Estimates, Cuts Apple's Price Target By 9%

Goldman Sachs’ Simona Jankowski mentioned that the estimates for Apple Inc. AAPL had been reduced to reflect lower market growth and lower ASPs.

Jankowski maintained a Buy rating on the company, while lowering the price target from $136 to $124.

Reasons for Estimate Revisions

“We are trimming our Apple estimates to reflect lower growth expectations for the smartphone industry, following recent reduction of our global smartphone unit growth forecast for 2016/17,” the analyst explained.

Jankowski has also revised the iPhone estimates, with the introduction of a detailed regional build, updating of the installed base model and accounting for an inventory overlay.

“Even with these assumptions, which we view as conservative, our model implies upside to consensus estimates,” Jankowski stated.

What Was Revised

While the FY16 estimates remain mostly unchanged, the EPS estimate has been lowered slightly from $8.40 to $8.39, which is still above the consensus expectation of $8.29.

The estimate is based on assumptions of 211 million iPhone units, lowered from the earlier expectations of 212 million.

The FY17 and FY18 EPS estimates have been lowered 8 percent to $9.70 and 11 percent to $10.19, respectively, although still above consensus.

“Our reductions are driven by lower market growth, as well as lower ASPs on a greater shift from developed to emerging markets, which we expect will drive a higher mix of the lower-priced iPhone SE relative to the higher-priced iPhone 7,” according to the Goldman Sachs report.