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Jefferies Cuts PT on Apple (AAPL) to $425; 'Terrible' Yields on Touch Sensors = Lower Shipments

September 13, 2013 7:01 AM EDT Send to a Friend
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Jefferies' Peter Misek is lowering his price target on Apple (Nasdaq: AAPL) from $450 to $425 today, while maintaining a Hold rating on the stock.

Misek says channel checks point to lower second-half 2013 iPhone builds due to terrible yields on fingerprint sensors. He sees calendar Q313 builds at 5 million to 10 million iPhone 5S units, 20 million iPhone 5C units, and 5 million to 8 million iPhone 4S builds. For CQ413, the analyst is modeling 5S builds of 20 million to 25 million (though 15 million is starting to look more likely), 5C builds of 30 million units (will likely be lowered), and 4S builds of 3 million to 5 million units. He comments, We note that the build plans vary widely (much more than normal) depending on the supplier, which we interpret to imply a combination of build cuts and component inventory issues. Prior CQ413 builds were 55 million to 60 million vs. current 48 million to 60 million with almost all of the downside revision due to the 5s.

Misek notes that the new iPhone 5C is being priced like the last-generation Apple iPhone, not a new, lower price. This alludes to the notion that the company is going for the higher price/lower market share option.

In addition to the above commentary, Misek lowers his FY14 EPS estimate on Apple from $38.78 down to $37.95, while boosting FQ313 EPS from $7.58 to $8.14 (the Street is at $7.65). Consensus views are looking for $42.66.

For fiscal 2014, Misek is lowering iPhone shipment estimates from 162 million to 147 million and his iPhone revs estimate is 16 percent below the Street. He cautions that checks with collegues in Asia indicated: paying a high premium for a product over a year old, made of plastic, has a 4" screen, and often linked to a content store that is not superior to alternatives, especially in China.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $472.69 on Thursday, with a 52 week range of $385.10 to $705.07.




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Comments

Lowering target to $300
Peter on 2013-09-23 21:53:16
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I am so mad now. I am going to lower AAPL to $300 now and $200 next year! I am shorting as I manipulate this stock with my lower rating.

Peter Misek
Avi on 2013-09-13 15:19:41
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I find articles by Peter Misek to be full of inaccuracies and and with malicious intent. Jeffries is tarnishing it's own reputation by enabling him to remain on their staff as an*LT143 analyst.


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