Connect with us


Apple Gets Rare Sell Rating, iPhone Sales ‘Unsustainable’



Thousands of loyal customers wait on long lines stretching many blocks outside the Apple Store | Apple Gets Rare Sell Rating, iPhone Sales ‘Unsustainable’ | Featured

Tech giant Apple received a rare “Sell” rating as an investment analyst saw unsustainable iPhone sales in the coming months.

New Street Research analyst Pierre Ferragu slashed his price target on Apple by 28%, to $90 a share. The investment firm also lowered its rating from “Neutral” to “Sell” given the near-term prospects.

It joined one other firm in issuing a “Sell” rating. No other major investment firm has Apple rated below “Neutral.”    

RELATED: Apple Posted Record Sales of $111.4 Billion

iPhone Sales Unsustainable

Ferragu argued that Apple's iPhone 12 sales will become unsustainable. Sales came in droves beginning last year due to the increased availability of 5G networks.

Now, iPhone sales can significantly slow down in the second half of 2021. In addition, many buyers saw their earnings remain unaffected during the pandemic.

However, their spending opportunities evaporated as many businesses closed shop, and travel and vacation opportunities evaporated. 

“Most affluent consumers did not see their earnings power much affected by the pandemic, but they saw their spending opportunities shrink.

High-end consumer electronics benefited as a result,” Ferrau said. “The iPhone is the best illustration of this, driving close to record shipments in FY21, implying the iPhone 12 is the second best-ever received iPhone, after the iPhone 6.”

Apple’s Next Line Up Not As Exciting

Also, Ferragu thinks that the next line-up of iPhones will lack the innovation that can excite new customers. As a result, he pegged his shipment forecasts between 180-200 million units, which is 20% below analyst consensus.

“The key question is how things shape up for next year, as the current super-cycle has brought forward demand, the next iPhone line up is likely a “12S” type with limited innovation, and consumers spend less on consumer electronics as the economy re-opens,” he noted. 

Meanwhile, Apple shares moved down 0.4% lower in early trading Friday to $124.77 each. For the year, Apple stock is now 6% lower than its price at the beginning of the year.

CFO Luca Maestri told investors earlier in April that the company will likely experience a “steeper than usual” sequential revenue decline. However, he attributed the projected decline to supply constraints linked to the global semiconductor shortage. 

iPhone Sales Boosted 2020 Revenues

Last year, iPhone revenues rose 65% from last year to $47.94 billion. This is well ahead of the $41.7 billion Street forecast. CEO Tim Cook attributed the sales to “strong demand for the iPhone 12 family” among other factors.

Greater China revenues nearly doubled, rising 88% from last year's $17.728 billion. Overall services revenues rose 26.6% to $16.9 billion.

Watch CNBC TV’s video report explaining why New Street Research downgraded Apple to sell:

Do you own an Apple product or do you plan to get one?

Please Select One:

View Results

Loading ... Loading ...

Do you own an Apple iPhone or any other product? Also, do you think you will buy a new Apple product again?

Finally, do you agree that Apple won’t sell as much as it did during the pandemic?

Share your comments in the comment section below.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2023 The Capitalist. his copyrighted material may not be republished without express permission. The information presented here is for general educational purposes only. MATERIAL CONNECTION DISCLOSURE: You should assume that this website has an affiliate relationship and/or another material connection to the persons or businesses mentioned in or linked to from this page and may receive commissions from purchases you make on subsequent web sites. You should not rely solely on information contained in this email to evaluate the product or service being endorsed. Always exercise due diligence before purchasing any product or service. This website contains advertisements.


Is THE newsletter for…


Stay up-to-date with the latest kick-ass interviews, podcasts, and more as we cover a wide range of topics, in the world of finance and technology. Don't miss out on our exclusive content featuring expert opinions and market insights delivered to your inbox 100% FREE!