Apple: Citi Cuts Target, Ests On Softer iPad, IPhone Forecast

Citigroup analyst Glen Yeung this morning cut his target price on Neutral-rated Apple shares to $480, from $500, while trimming his estimates for iPhone and iPad unit sales for the March and June quarters.

?Indications of reduced demand to Apple?s suppliers contribute to our existing concerns that end-demand for 10-inch iPad and iPhone 5 in particular is softening, reflecting share loss by Apple in both the tablet market and the smartphone market,? Yeung writes.

On iPhone 5, he writes that checks with the supply chain ?again? finds evidence of reduced demand to Apple?s suppliers for the phone. One factor, he says, could be slowing production ahead of what he expects will be a September quarter launch of the iPhone 5S. But he adds that he thinks the effect from pending launches is minor, and that most of the slowing production reflects softening demand. He now sees March quarter iPhone unit sales of 34 million, down from 35 million, and below the Street at 37 million. For the June quarter, he continues to forecast 25 million units, below the Street at 32 million.

As for the iPad, he says ?fieldwork? suggest lower demand for 10-inch iPad components, due in part to cannibalization from the 7-inch version. But he also says checks find Mini production will flatten in the June quarter, potentially in part due to pending new versions of the Mini. He cuts his March quarter forecast for 10 inch iPads to 6 million from 7 million; for the Mini he goes to 12 million, from 13 million. For the June quarter, he now sees 6 million units of the larger iPad, down from 6.3 million; for the Mini he goes to 13 million, from 13.3 million.

Meanwhile, Yeung says that despite widespread speculation, he finds little evidence that Apple is working on a low-end iPhone.

Based on his reduced unit estimates, the analyst now sees March quarter revenues of $40.4 billion, with profits of $9.23 a share, below the Street at $42.9 billion and $10.22. For the June quarter, he?s expecting $35.1 billion and $8.09, well below consensus at $35.1 billion and $8.09. And for FY 2013, he sees $171.6 billion and $41.49 a share, below the Street at $182.7 billion and $44.77.

AAPL is down $4.89, or 1.1%, to $426.25.

Source: http://www.forbes.com/sites/ericsavitz/2013/03/06/apple-citi-cuts-target-ests-on-softer-ipad-iphone-forecast/

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