Rosenblatt Cuts iPhone Shipment Estimates On China Weakness

A fresh batch of data out of China suggests the trade war fallout for Apple, Inc. AAPL might not be over anytime soon, according to Rosenblatt Securities.

The Analyst

Analyst Jun Zhang has reiterated a Neutral rating on Apple with a $150 price target.

The Thesis

Rosenblatt’s latest checks on Chinese iPhone sales suggest demand dropped off following the recent Chinese New Year holiday, Zhang said in a Tuesday note.

Sell-through for the iPhone XR improved on a monthly basis in January, but the latest data indicates that pricing cuts have generated very little sustained demand for iPhones in China, the analyst said. 

Rosenblatt reiterated its estimate for between 38 million and 39 million iPhone shipments in the March quarter, but the firm has cut its estimates for June quarter shipments by 1 million units to 33 million.

With the trade war dragging on, investors shouldn’t expect conditions in the Chinese market to improve in the near future.

The Chinese Institute of Communication Research recently reported a 12.8-percent decline in China domestic smartphone shipments in the month of January. Zhang said some domestic Chinese smartphone companies are pushing up launch dates for new phone models in an attempt to stimulate demand, adding that a lack of innovation in new models means meaningful buying is unlikely in the market. 

In the meantime, the upside for Apple stock will likely remain limited given the uncertain global smartphone market, Zhang said.

Rosenblatt's price target is based on just a 12.5 earnings multiple on the sell-side firm's fiscal 2020 EPS estimate of $12.

Price Action

Apple shares were up 0.22 percent at $170.80 at the time of publication Tuesday. 

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Photo courtesy of Apple.