UPDATE: Canaccord Genuity Downgrades GT Advanced Tech (GTAT) to Hold; iPhone 6 May Not Include Sapphire in Material Volumes, Says Analyst

(Updated - July 7, 2014 7:58 AM EDT)

Canaccord Genuity downgraded GT Advanced Tech (NASDAQ: GTAT) from Buy to Hold with a price target of $20.00. Analyst Jonathan Dorsheimer doesn't believe the initial launch of the iPhone 6 will have a sapphire display in "material volumes."

"We believe GTAT is positioned to benefit from a move to sapphire cover glass in the handset market, as well as a ramp in solar and some new technologies. However, with much of the news priced in the shares, we feel the near-term opportunity is fairly valued at current levels. Investment highlights," said Dorsheimer. "We view GT Advanced Technology as a pioneer of sapphire cover glass. However, we see a balanced risk reward at current levels given the limited disclosure around Apple’s launch of the iPhone 6 and iWatch, combined with recent assumptions of cover glass adoption."

"We do not believe that the initial launch of the iPhone 6 will have a sapphire display in any material volumes, in either 4.7” or a 5.5” form factor. While Apple may test the market with a limited volume premium option on either the 4.7” or 5.5”, based on our sensitivity, we struggle to achieve consensus targets," he continued. "Our sensitivity analysis reveals that EPS upside in 2016 requires Apple using sapphire in all iPhone models and iWatch combined with a base case PV scenario AND a 10% sapphire operating margin, which is yield dependent. While possible we believe this is somewhat aggressive. With shares just off a historical high water mark and heading into a blind somewhat binary event, we are taking this opportunity to downgrade the shares to a HOLD and maintain our $20PT."

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 $19.55 yesterday.

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