Market Minute: Apple Results Spur Price Target Cuts, Shares Fall 9%


Weaker-than-expected holiday sales of Apple Inc's (AAPL) iPhone reinforced fears that it is losing its dominance in smartphones, driving its shares down 9 percent in premarket trading and drawing another round of stock price target cuts.

Fourteen brokerages including Barclays Capital, Mizuho Securities USA, Credit Suisse, Deutsche Bank, Raymond James, Robert W. Baird & Co and Canaccord Genuity cut their price target on the stock by $142 on average to $599.

Apple's shares closed at $514 Wednesday on the Nasdaq.

Jefferies & Co cut its rating on Apple's stock to "hold" from "buy" and slashed its share price target by $300 to $500.

Jefferies analyst Peter Misek, who has previously raised red flags about Apple cutting orders to suppliers, said the iPhone slowdown was "real and material" and here to stay.

Apple shares fall"We think Apple is losing the screen-size wars," Misek said, noting that demand was moving away from the iPhone's 3.5-inch and 4-inch screens to screens of 5 inches offered by rivals such as Samsung Electronics Co Ltd, HTC Corp and Nokia Oyj.

Misek is a top-rated analyst for the accuracy of his earnings estimates for Apple, according to Thomson Reuters StarMine.

Apple said it shipped a record 47.8 million iPhones in the December quarter, but this trailed the average analyst forecast of 50 million units.

Deutsche Bank trimmed its price target to $575 from $800, and said Apple should start making a lower-priced iPhone to arrest the market share loss.

Credit Suisse analysts said a new product cycle and wider telecom carrier selection could be possible catalysts for the company, but added that these were not imminent.

"We believe a lower ability to beat earnings per share expectations, and some concerns on demand, may weigh on the stock near-term," said Credit Suisse, which cut its target price by $150 to $600.

Up to Wednesday, 24 analysts had lowered their price targets since October when Apple reported its fourth-quarter results, according to Thomson Reuters data.

Apple is the lowest ranked stock among the marquee technology firms in the United States based on the change in analyst sentiment, or Analysts Revision Model (ARM), according to StarMine.

Apple's global ARM score of 10 is well below Google Inc's (GOOG) 34 and Microsoft Corp's (MSFT) 19 out of a possible 100. Nokia (NOK) and Samsung have scores of 82 and 89, respectively.

Research in Motion Ltd (RIMM) has a perfect score of 100, according to the model, which measures analysts' revision of key indicators such as earnings and revenue estimates and changes to their ratings.

Apple shares were trading at $468 before the bell.

(Reporting by Himank Sharma and Saqib Ahmed in Bangalore; Editing by Saumyadeb Chakrabarty)


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6 Comments

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amani4000

The current market is going to adjust to demand of goods. A saturation point of devices that all do basically the same thing will see lower priced devices out sell Fad items. Apple's run at the top is over.Without Jobs at the helm,they will slowly decline lie Kodack.

January 24 2013 at 3:22 PM Report abuse rate up rate down Reply
Carl Johnson

Once upon a time, the New York Stock Exchange was totally driven by the REAL value and exchange of goods and commodities. For the last 30+ years the market has been driven by smoke and mirrors. All it takes today to make the market drop 800 points is one person giving a speech somewhere or one company like Apple making a random announcement.

January 24 2013 at 10:48 AM Report abuse rate up rate down Reply
posthuf

Not a problem. I bought a few years ago at $88.43 and sold late last year at $700.

I wish!

January 24 2013 at 10:33 AM Report abuse rate up rate down Reply
judy

What a loss It cause me, nothing

January 24 2013 at 9:57 AM Report abuse rate up rate down Reply
David

Apple should have no effect on the market if the market is strong enough!

January 24 2013 at 9:47 AM Report abuse rate up rate down Reply
1 reply to David's comment
itacurubi

The arithmetic says differently: AAPL's market valuation is still so high that a big fall is going to hit the indexes.

January 24 2013 at 11:48 AM Report abuse rate up rate down Reply