Firsthand checks with Apple Inc. (NASDAQ: AAPL) suppliers point to a stabilization in demand for the smartphone, but also give "little optimism" around a recovery in the near-term, according to KeyBanc Capital Markets.
Firsthand checks within Apple's supply chain suggest orders for new iPhone components will be down by at least 10 million units in the back half of 2019 versus the comparable period in 2018, Hargreaves said in a Monday note. (See his track record here.)
This suggests the potential for a stable outlook, but also implies ongoing weakness through the fiscal 2020 cycle, the analyst said.
Apple's core Services business will likely see ongoing deceleration on top of regulatory risk related to potential changes in how the App Store shares its revenue, Hargreaves said. It is "unlikely" Apple will post upside to new services in video, gaming, news and credit due to a lack of any competitive advantage over rival services, he said.
Due to the absence of any catalysts that point to a recovery in Apple's business, KeyBanc lowered its fiscal 2020 EPS estimate from $12.85 to $12.61. The 2020 revenue estimate was also lowered from $268 billion to $263 billion, partly due to the firm dropping its iPhone average selling price estimate from $738 to $731.
Apple shares were up 2.66% at $199.06 at the time of publication Tuesday.
Wedbush: Apple's Stock Could Gain - From US-China Trade Deal
Apple's WWDC 2019 Was All About Apps, Security
Photo courtesy of Apple.
Latest Ratings for AAPL
|Jun 2019||Initiates Coverage On||Outperform|
View More Analyst Ratings for AAPL
View the Latest Analyst Ratings
See more from Benzinga
- RBC Says Facebook's Libra Could Be A 'Watershed Moment' For Cryptocurrency
- Alibaba Proposes Stock Split To 'Increase Flexibility' Ahead Of Capital Market Activities
- Huawei Acknowledges Potential B Revenue Shortfall
© 2019 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.