UBS Cuts AAPL Estimates, Cites Low End iPhone Sales

| Apple Stock Watch

USB analyst Steve Milunovich cut his fiscal 2013 and 2014 estimates for Apple follow a report that claims consumers are leaning more towards lower memory iPhones and older models. His new 12 month target price for Apple's stock is down US$50 from $700 to $650.

Lower expectations for Apple from UBS

Mr. Milunovich said he expects iPhone gross margins to take a an 8-10 point hit thanks to "the downward mix shift and higher launch costs in [fiscal] 2013," according to Forbes.

Those changes have Mr. Milunovich lowering his fiscal 2013 profit estimate from $47 a share down to $44.68. For fiscal 2014, he predicts $52.80, down from $55.85.

The study he cited came from Intelligence Research Partners. The report claimed preferred storage capacities in iPhone purchases is trending down from 30GB in the iPhone 4S down to 20GB in the iPhone 5, indicating buyers are purchasing more 16GB and 32GB models than 64GB versions.

The report also claimed demand for pre-iPhone 5 models is up about 50 percent. In comparison, when the iPhone 4S was the newest model, demand for previous versions was at 33 percent.

Despite his lower expectations for Apple's iPhone revenue, Mr. Milunovich is optimistic the the smartphone will continue to sell well, especially with a pending deal to bring the combination iPod and smartphone to China Mobile before the end of the year.

Mr. Milunovich is maintaining his "Buy" rating for Apple's stock. Apple is currently trading at $499.26, down 0.74 (0.15%).

Comments

ibuck

Analysts lowering outrageous expectations could be good.

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