Apple's (AAPL) Price Target Trimmed at Pacific Crest as Demand Appears 'Stable but Soft'

Pacific Crest maintained an Overweight rating on Apple (NASDAQ: AAPL) but trimmed its price target to $127.00 (from $132.00). Analyst Andy Hargreaves said iPhone demand appears stable but soft, though he continues see positive risk/reward in the stock given valuation and the likelihood of strong growth in the iPhone 7 cycle.

"Our supply and demand checks have remained largely stable over the past two months, but appear more consistent with FQ2 (March) results at the low end of the company's guided range. As a result, we are reducing our FQ2 iPhone unit sales estimate slightly to 47.5 million from 49.0 million, which drives our FQ2 revenue estimate to $50.0 billion from $51.3 billion and our F2016 EPS estimate to $8.73 from $8.89," said Hargreaves.

"We see no evidence of iPhone customers leaving the platform at greater levels. If this remains the case, we continue to believe normal replacement dynamics will drive midteens iPhone unit growth in the iPhone 7 cycle, which should drive commensurate EPS growth in F2017," continued the analyst.

Hargreaves added, "Anticipated launch of a new "low-end" iPhone on March 21 suggests that Apple will discontinue the iPhone 6 rather than waterfall it to the low end when the iPhone 7 launches. We view this positively, as it should help protect against potential trade-down activity that could threaten gross margin."

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 $103.01 yesterday.

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