Credit Suisse is not impressed at all with Apple Inc. (AAPL) and its new iPhone 5 models. We agree, as does Bank of America/Merrill Lynch with its key downgrade this morning. That analyst downgrade was one of sentiment, but Credit Suisse's downgrade of Apple is far worse because it involves a lowering of estimates and expectations. Tim Cook is still chasing the ghost of Steve Jobs and the Apple iPhone 5 refresh (and de-minimus model) are just not enticing any new interest.
The firm downgraded Apple shares to Neutral from Outperform, and the firm has a $525 price target. Credit Suisse's downgrade basically says "so much for the low end" and is lowering the firm's 2014 earnings expectations as a result. Kulbinder Garcha said
As expected, Apple yesterday announced the iPhone 5s and iPhone 5c which both feature the newly redesigned iOS 7. In aggregate, we remain disappointed with Apple's decision to remain a premium priced smartphone vendor, and this continues to competitively expose the company and limits its TAM and growth. Given a lack of TAM expansion and lower iPhone sales potential, we lower earnings per share by 8% for Fiscal Year 2014 and downgrade to Neutral.
The only good news is that Credit Suisse actually is still higher than what it calls consensus earnings. The lowered earnings per share target for 2014 is down to $44.48 from $48.22 per share, and the firm listed the consensus at $42.38 in earnings per share, which matches what Thomson Reuters lists as the consensus earnings estimate.
Apple shares were down around $482 when we first identified that Merrill Lynch Apple downgrade, and now shares were down just under $470 for a 5% drop right after the open on Wednesday.
As a reminder, $460 is where some serious support should be if things get much worse, because that is where the 50-day and 200-day moving averages come into play.