Shares of Apple Inc. tanked Thursday, after the technology giant’s revenue warning triggered an avalanche of price target cuts by Wall Street analysts.
There were only a couple of downgrades, but almost half of the 41 analysts surveyed by FactSet have lowered their price targets, some by as much as $100.
That knocked the average target down by 11.4% to $191.24 from $215.91 on Monday, marking the lowest average target since it hit $190.70 as of Nov. 30, 2017. The average rating remained at the equivalent of buy–there were only two downgrades Thursday, according to FactSet–as the new target was about 32% above current levels.
sank 8.4% in midday trade, putting it in danger of the lowest close since July 2017. That would be the biggest one-day percentage decline since January 2013. The price decline of $13.29 was shaving about 90 points off the Dow Jones Industrial Average’s price
which sank about 400 points.
The selloff pushed Apple’s market capitalization down to about $686.3 billion, the lowest since it closed at $684.7 billion on Feb. 6, 2017, according to FactSet. Apple’s market cap fell below Google-parent Alphabet Inc.’s, currently at $724.7 billion, to knock Apple down to fourth on the list of most valuable U.S. companies.
Goldman Sachs analyst Rod Hall chopped his price target by 42% to $140, the lowest target he’s had on the stock since early 2017, from $240, while maintaining the neutral rating he’s had for the past 11 months. Beyond China, Hall is also concerned by weaker rates for iPhone replacements, likening Apple’s current predicament to the one that knocked Nokia Corp. off its perch more than a decade ago. Read more about Apple’s revenue warning.
Analyst Brian White at Monness Crespi Hardt also slashed his target by $100 to $200, but kept his rating at buy, citing a valuation that he believes is “depressed.” He said Apple’s net cash position of $25.29 a share keeps him bullish.
Meanwhile, Jefferies’ Timothy O’Shea downgraded Apple to hold, and cut his price target to $160 from $225, citing concerns over how the company will deal with its biggest “miss” in years.
“We still think Apple can build a massive services business over time. But [Apple] hasn’t missed its guide in years, so the extent of this miss suggests it is navigating uncharted waters,” O’Shea wrote in a note to clients. “We move to the sidelines and wait for clarity as uncertainty grows around the hardware business.”
In Apple’s latest annual report, filed on Nov. 5, iPhone sales of $166.7 billion represented 63% of total sales, up from 62% a year ago.
Wedbush analyst Daniel Ives lowered his stock price target to $200 from $275, saying the “massive” negative outlook represents “Apple’s darkest day in the iPhone era,” which began in 2007.
“Last night Apple delivered a bombshell negative preannouncement that will be a defining moment for Cook & Co. for years to come,” Ives wrote in a research note. “Although the company had some soft quarters over the past 20 years that missed Street expectations, in the modern iPhone era last night was clearly Apple’s darkest day in our opinion and represents a challenging growth period ahead for the company (and its investors).”
Tim Cook became chief executive officer of Apple in August 2011.
Ives kept his rating at buy despite the “black eye” results, because he believes Apple is an “installed base story of 750 million active iPhones worldwide,” with nearly half of those in the window of upgrade opportunity over the next 12-to-18 months.
Apple’s “bombshell” also hurt shares of its suppliers, even though many had already issued revenue warnings in recent months citing weakening demand from a large smartphone customer.
Shares of Lumentum Holdings Inc.
lost 6.5%, Qorvo Inc.
dropped 7.6% and Skyworks Solutions Inc.
slumped 7.6%. Austria-based AMS AG’s
plunged 23% in overseas trading.
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