Goldman Sachs Lowers Global Smartphones TAM; Apple (AAPL) Estimates Unchanged

Goldman Sachs maintained a Buy rating on Apple (NASDAQ: AAPL) with a price target of $107. Earlier Goldman Sachs lowered global smartphone TAM estimates. However, changes are unlikely to effect Apple.

"Today, our global team published a note on the implications of significant pricing pressure in the mid and low-end smartphone markets, particularly in emerging regions," said analyst Bill Shope. "The team is reducing their overall handset/smartphone 2013-‘16E revenue TAM CAGRs to 3.9%/7.5% from 7.0%/11.5%, respectively, while leaving unit estimates largely intact. The reduction is due to several factors including limited upside to smartphone unit growth, ASP pressure from new smartphone distribution models in emerging markets, and smaller subsidy pools in some regions."

"While these factors will likely have a marked effect on overall market growth, we believe it is unlikely that they will have a material medium-term impact on Apple’s iPhone business. This is largely due to the lower-end focus of these vendors as well as a buffer from the upcoming iPhone 6 product cycle and the push into the phablet market. While overall blended pricing has been coming down in recent years, the addition of a phablet could serve to offset that trend and we project the iPhone ASP in FY2015 to remain flat with FY2014. With that said, as the pricing divergence between high-end and low-end smartphones continues to widen over time, there is the potential for increasing pressure on Apple; this is an important long-term risk factor to monitor, but it does not impact our current thesis," he said.

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 $102.50 yesterday.

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