Rosenblatt Securities Downgrades $AAPL to ‘Sell’ on Predictions of Slowing iPhone, iPad, Services Growth

Apple with a big pile of money

Analyst Jun Zhang of Rosenblatt Securities issued a “Sell” downgrade on shares of Apple Inc. Monday citing unspecified predictions of slowing iPad and iPhone sales, as well as slowing growth of Apple’s newest shiny, Services. The firm previously had a “Neutral” rating on $AAPL, and it maintained its US$150 price target for the stock.

Apple with a big pile of money

“We believe Apple will face fundamental deterioration over the next 6 to 12 months,” the firm said, according to CNBC. Adding to our ‘Sell’ thesis, we believe new iPhone sales will be disappointing, iPad sales growth will slow in the second half of 2019, other product sales growth, such as the HomePod, AirPod, and iWatch, may not be meaningful to support total revenue growth.”

This level of analysis is to me the flip side of Apple fanboy ebullience. It’s faith-based commentary with little reason or evidence to back it. Mr. Zhang presents his thesis of slowing sales of this and that as a given, but it’s hardly that. There are plenty of reasons to take a healthy, skeptical look at Apple’s stock and business, but remember that Rosenblatt Securities has been Neutral on Apple while the company’s stock has been on the rise.

Apple will report June quarter earnings on July 30th. Shares of $AAPL did take a hit today, though, ending the day at $200.02 per share, down $4.21 (-2.06%), on moderate volume of 25.3 million shares trading hands.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

3 thoughts on “Rosenblatt Securities Downgrades $AAPL to ‘Sell’ on Predictions of Slowing iPhone, iPad, Services Growth

  • Analysts typically underestimate Apple’s sales and earnings for a multitude of reasons – one being that it’s difficult to track its complex network of suppliers, retail outlets and online sales. Apple will sometimes make big shifts amongst its suppliers not because of demand but due to fluctuating currencies. When you’re making millions of devices with tenfold components, a small change in currency adds up to a lot of money.

    But Zhang does have a point – smartphone sales are maturing in many countries and with only incremental hardware improvements, it’s hard to drive significant sales beyond the normal replacement cycle, switchers and upcoming generation getting their first device. That’s why China and India are so important as smartphone adoption in those countries is still young.

    Still, as an AAPL investor, I’m hoping for not only surprising results in the hardware area, but also significant growth in software and services – which is far more profitable and indicates long term demand for its products.

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