UBS analysts maintained a "neutral" rating on Apple (AAPL, Financial) and maintained an unchanged price target of $236, saying that iPhone sales were now in line with expectations. It comes after November sell-through for iPhones dropped more than 8% year on year to lower forecasts for iPhone sales in the December quarter.
iPhone unit estimates were lowered to 77 million from 82 million and revenue to $67.2 billion from $69.7 billion. The move represents a 4 percent year-over-year revenue decline versus former expectations of flat growth. The analysts now expect total December quarter revenue of $120.8 billion, down 2% from the prior estimate of $123.3 billion and short of the consensus of $124.9 billion. The consensus earnings per share forecast for the quarter was also cut to $2.36 from $2.31, and the EPS came in at $2.25, which is a $2.36 estimate.
Soft in iPhone sales dampens hopes that are normally at their highest this season. However, a near 1% downward revision of gross revenue is offset by robust App Store performance, which pushes services revenue by 1%.
The challenges notwithstanding, Apple's fundamentals are strong, with a gross profit margin of 46.2 percent and trailing 12-month revenue growth of 2%. Wedbush Securities remains optimistic about Apple's long-term performance, given advances in artificial intelligence.
Apple is currently trading at a lofty $3.79 trillion valuation, which is stretched out clearly, but with a diversified and smarter portfolio, coupled with strategic moves such as AI and global partnerships, perhaps the US tech giant could become better suited for bearing the beatings of the fast-changing tech world.
