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Jefferies Cuts Target on Apple (AAPL) by $100; Sees Saturation Slowing iPhone Growth in FY14

December 10, 2012 7:12 AM EST Send to a Friend
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Jefferies cut its price target on Apple, Inc. (Nasdaq: AAPL) from $900 down to $800, maintaining a Buy rating in the process.

The firm maintains its outlook for calendar fourth-quarter 2012 and first-quarter 2013 sales and earnings, but hinted at slowdown in fiscal 2014 for Apple. Fourth-quarter iPhone build plans have been reduced from a range of 60 million to 65 million units, now to just 60 million units. Jefferies cites continued build issues on the adjustment, but the numbers are still above the firm's 53 million estimate and consensus of 46 million to 48 million.

iPad build plans remain the same in Q4, but move from 30 million down to 25 million in the first-quarter 2013.

Jefferies moves its iPhone "5S" launch from Q413 back to Q313. The firm said, "[b]ased on our checks, likely updates include a new super HD camera/screen, a better battery, and NFC. Possible updates include an IGZO screen for Retina+, 128GB storage, and coming in 6 to 8 colors."

A new iPad should be expected next June with an Apple television set modeled for a September/October launch. The firm said, "We think the iPad 5 will most likely use an IGZO screen, which will cut the thickness in half and significantly reduce weight. We expect modest spec boosts for the mini with the possibility of multi colors and an HD display."

On a lower-cost iPhone, Jefferies hasn't heard any information yet. The firm sees any sort of lower-cost device launching in Summer 2013 with a price of $200 to $250 per unit. Jefferies said, "Our analysis indicates that while Apple would gain unit share, revenues/EPS would remain largely unchanged and GM would fall."

Finally, on growth in fiscal 2014, Jefferies sees iPhone saturation leading to a slowdown in overall growth by 20 percent or so. The firm noted, "Our analysis indicates that while Apple would gain unit share, revenues/EPS would remain largely unchanged and GM would fall."

Apple is indicated for a lower open Monday.




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