MW Apple downgraded to sell by Goldman Sachs as virus expected to hurt demand for iPhone, other products
Goldman Sachs downgraded Apple Inc. stock $(AAPL)$ to sell on Friday and cut its price target to $233 from $250, as it reduced its earnings estimates for a third time since Feb. 17. Analysts led by Rod Hall said they are modeling a far deeper reduction in unit demand through mid 2020 followed by a shallower recovery heading into 2021. "We also assume some lingering ASP (average selling price) weakness as consumers look to economize similar to what we have seen in prior downturns," they wrote in a note to clients. "In addition to this we believe that Services growth slows substantially in 2021 and that Services as a percentage of revenue actually stagnates in that year." Goldman is expecting a 36% decline in iPhone unit demand in the second quarter and a 24% decline in the first half of calendar 2020. Analysts are expecting the company's other products to experience a similar trajectory. "There are multiple examples of ASPs dropping in the midst of a recession and then remaining weak well beyond the point when units recover," said the note. Price weakness could affect 5G design choices too, and limited global travel may cause the delay of the launch of this year's updated iPhone, it said. Apple shares were up 1.1% premarket Friday, but are down 2.4% in the year to date, while the Dow Jones Industrial Average has fallen 18% and the S&P 500 has fallen 13%.
-Ciara Linnane; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
April 17, 2020 06:21 ET (10:21 GMT)
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