Apple (AAPL) iPhone X Cycle Is 'Good, Not Great' Leading Longbow to Downgrade The Name

Shares of Apple (NASDAQ: AAPL) fell $2.59 or roughly 1.5% to a low of $173.20 before rebounding back to a $175 handle Wednesday morning following a Longbow downgrade to Neutral (from Buy).

"Good, Not Great" Cycle

Analyst Shawn Harrison stepped to the sideline following recent channel checks which yielded evidence of a "good, not great" iPhone cycle. The analyst remains positive on sales noting he continues to forecast a beat on iPhone sales expectations for Q1. However, he lowers his FY 2018 shipments forecast to 233 million and reduced his FY 2018 EPS estimate to $11.25.

Harrison says checks indicate that iPhone reception has been "lukewarm" and he suspects FY 2018 iPhone shipment growth will be in the mid- to -high single-digits. The analyst also notes that China retail sales remain positive for the iPhone X and 7 but not for the iPhone 8.

As for Apple's other products, Harrison comments "The Mac and iPad are seeing resurgent demand. IDC estimates Mac shipments grew 7% year over year vs. +1% market growth. In addition, newer products are resonating, including the Watch and AirPods, creating additional sales streams."

Bank of America Price Target Hike Saves The Stock

A couple hours later Bank of America/Merrill Lynch analyst Wamsi Mohan comes out with a raised price target $220.00 (from $180.00) which is the news high target on Wall Street. The analyst commented "We believe the risk/reward profile for the name is improving. Client concentration has come down to more manageable levels due to non-execution-related spending cuts at two large clients. Luxoft has absorbed these cuts as utilization has rebounded, which should drive margin improvement. We expect client concentration to continue to decline over the long term."

Shares of Apple managed to nearly erased the morning decline and as of this posting are down $0.81 or 0.46% to $175.37.

StreetInsider Premium first published a variation of this article at 4:39AM ET. Try StreetInsider Premium for two weeks free here.

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