Apple Inc (NASDAQ:AAPL) stock is trading lower Monday after Loop Capital downgraded the stock to Hold.
Analyst Ananda Baruah set a price target of $180 on Apple.
The re-rating reflects Apple is reducing its builds and shipment forecasts for the second time in the last four weeks.
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Specifically, Loop’s Supply Chain Analyst John Donovan sees Apple having reduced its June quarter builds and shipments by ~10%, which, per Baruah, is incremental to the lowered June quarter guidance the iPhone maker provided on May 4.
The analyst sees material downside risk to June quarter revenue (both iPhone & overall) relative to both Apple’s guidance and Street after this weekend.
Apple has incrementally reduced its June quarter iPhone builds and shipments.
On May 4, Apple guided June quarter revenue to $80 billion, or down by ~$5 billion than that Street. The guide reflected ~40 million iPhone shipments, 2 million – 4 million lower than its prior estimate and 8 million lower than Street.
This weekend Apple reduced its June quarter iPhone shipment estimate by an incremental 5 million – 35 million (and its builds by a similar amount), which the analyst believes is demand related.
While the analyst believes Apple’s September quarter & December quarter shipment outlook remains intact, and the risk of a guidance cut has increased.
The analyst also sees positive implications developing as they move into the Fall. He believes Apple is targeting the September quarter & December quarter shipments to be 65% new phones (iPhone 15) vs. 50 – 55% for the iPhone 12 – iPhone 14.
Over the weekend, Apple reduced the benefit of the mix, as last week he expected 75% of September quarter & December quarter shipments to be new phones (iPhone 15).
Despite the overall risks, the analyst believes stronger than appreciated iPhone ASPs can counterbalance softening units.
Price Action: AAPL shares closed lower by 0.55% at $174.20 on Monday.
