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Analysts Say Downgrade Of Apple Stocks Not Due To US-China Trade War


08/22/2019


Analysts Say Downgrade Of Apple Stocks Not Due To US-China Trade War
Apple shares were downgraded from neutral to sell by Rosenblatt in July and the broker is still holding on to its that position for the stock. A 28 per cent drop from the stock’s Tuesday’s close of about $210 per share was represented by the long-term price target of $150.
 
“We continue to believe that even without tariffs, Apple’s iPhone sales will continue to be weak,” says an analyst from the firm.
 
However others, including Krish Sankar from Cowen, still hold a bullish outlook for the United States based tech company. The target price of the company for the stocks at $250 was 19 per cent higher than the Tuesday’s close.
 
The down grading of the stocks of Apple as done by Rosenblatt Securities was primarily because of factors that were related to slow growth in production sales and a delay in the rollout of 5G networks and had nothing to do with the tariffs that China has imposed on its products as a part of its trade war with the United States, an analyst of the firm said in a television interview. 
 
While downgrading the stocks of Apple, Rosenblatt had said that Apple will “face fundamental deterioration over the next 6 to 12 months” because of a slowdown growth of product sales of the company in the second half of 2019.  The firm stuck with its 12-month $150 price target.
 
A month later, the institutional broker still stands by its bearish sentiment. The long-term price target of $150 represents a 28% drop from Tuesday’s close of about $210 per share.
 
continued weakness in iPhone sales and delay in 5G were the two reasons that Rosenblatt downgraded Apple, explained the senior research analyst, Jun Zhang. “We expect Apple [to cut] production for the December quarter because of continued weakness in iPhone sales. The second reason is Apple lags behind the 5G cycle. When you look at next year, China is going to be the largest 5G market. That will leave Apple [to] continue [to lose] shares in China so I don’t think Apple’s 5G [network] will be heading next year,” said the analyst.
 
 
Zhang also noted that “the reason [why] we downgraded Apple is not because of tariffs. I don’t think it matters too much. ... We continue to believe that even without tariffs, Apple’s iPhone sales will continue to be weak.”
 
On the other hand, Sankar from Cowen said about Apple stocks that “Service is a big piece of the pie. ... The positive surprise will come from services and it will be very interesting to see how they price the [Apple TV+] offering for the next few months.”
 
While talking about the 5G issue of Apple, Sankar argued: “we’re still very early in the 5G cycle. Especially in the U.S. if you own an iPhone and [the 5G phone] is going to be delayed by nine months to 12 months, chances of consumers switching over to Android is diminutive, I would say. ... I don’t see 5G delay as a big risk in the big picture.”
 
So far this year, there has been a 35 per cent jump in the shares of Apple. ,
 
(Source:www.cnbc.com)


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