Goldman Sachs Cuts GT Advanced Tech (GTAT) to Neutral; Analyst Disappointed by Apple
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Rating Summary:
4 Buy, 7 Hold, 2 Sell
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Up: 11 | Down: 18 | New: 17
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Goldman Sachs downgraded GT Advanced Tech (NASDAQ: GTAT) from Buy to Neutral with a price target of $14.00 (from $20.00). Analyst Brian Lee is disappointed Sapphire wasn't used in the Apple's new iPhone.
"Contrary to our view, Apple did not include sapphire display technology in either of the new iPhone 6 models. Instead, Apple launched a new smartwatch device, available in early 2015, which includes a sapphire display and for which we believe GTAT is a supplier. In our view, this is disappointing from both a timing and volume perspective for GTAT and thus we significantly cut our estimates and price target," said Lee.
Lee remains positive long-term on GT Advanced Tech but he sees near term risk for the stock.
" Challenging 2014 guidance. Given the timing of Apple’s smartwatch availability and likely much smaller volume content of sapphire vs. an iPhone, we see heightened risk around GTAT’s 2014 guidance. We had previously assumed roughly 20mn iPhone units in 2H14. Removing this from our model and assuming a 10mn unit run rate for watches starting in 4Q14, we lower our 2014E revenue/EPS to $497mn/($0.09) vs. $634mn/ $0.12 prior – implying downside to guidance ranges of $600-$700mn and $0.12-$0.18, respectively. We expect this catalyst on 3Q14 earnings," continued the analyst.
"No near-term product catalysts. While sapphire in the watch implies GTAT is positioned to deliver to Apple in 2H14, we see the lack of a design win on the iPhone pushing out meaningful volume upside for GTAT into late 2015 given our muted view on the potential for watches. Barring an unexpected product cycle, this implies limited catalysts near term," he added.
For an analyst ratings summary and ratings history on GT Advanced Tech click here. For more ratings news on GT Advanced Tech click here.
Shares of GT Advanced Tech closed at $14.94 yesterday.
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