IPhone trends are going from bad to worse

Cornelia Mascio
Marzo 14, 2019

"Without iPhone demand acceleration on the horizon, we now do not see any catalysts near term to drive significant EPS upside", Longbow Research analyst Shawn Harrison wrote Tuesday, adding that the iPhone situation in China was going "from bad to worse". While the stock has rebounded 27 percent from a January low, and is now trading at its highest level since December, Apple remains more than 20 percent below record levels reached in October.

Weak iPhone shipments have undercut Apple's stock in recent months, highlighted by its struggles in China. According to data compiled by Bloomberg, nearly 20% of Apple's fiscal 2018 revenue was derived from China, and the iPhone accounted for 62% of revenue.

Of 42 Apple suppliers in the region, Harrison said, 37 of them "reported worse than seasonal sales" in February.

Longbow Research used searches on China's dominant search engine, Baidu, to draw its conclusions, reckoning that year-on-year, interest had fallen by 47 per cent from 2018.

Analysts are split on Apple's outlook with 22 recommending buying shares and another 22 recommending holding the stock. The average price target of $179.06 is slightly below Apple's closing price of $180.91 on Tuesday.

Apple's second-quarter results will be released on or about April 30. Analysts expect Apple to report earnings of $2.38 per share on revenue of $57.54 billion, indicating declines of 13% and 5.9%, respectively, from the year-ago period. These estimates indicate a drop of almost 13 percent in profitability and sales falling 5.9 percent compared to the prior-year period.

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