Jefferies Cuts PT on Apple (AAPL) to $405; Lowers Ests on iPhone Production Cuts

June 24, 2013 7:13 AM EDT
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Jefferies is adjusting some of its estimates on Apple (Nasdaq: AAPL) sales for the upcoming quarter. The firm maintains Apple at Hold, lowering its price target from $420 to $405.

Analyst Peter Misek is trimming fiscal Q313 iPhone shipment expectations from 30 million down to 27 million units and fiscal Q413 units from 50 million down to 45 million.

Inventory levels at about 10 weeks, versus the normal 4 to 6 weeks, has Misek lowering build expectations from 40 million to 45 million down to 25 million to 30 million in the upcoming quarter and from 60 million to 65 million down to 50 million to 55 million in the subsequent quarter. He comments, "We had recently noted that smartphone inventory levels at retail and carriers were elevated but were unsure which OEMs were most exposed. Our survey of several hundred Orange, Vodafone, and EE stores in the U.K. indicates that inventories are elevated for iPhones and the Samsung Galaxy 3."

Misek also alludes to recent quarterly results from Jabil (NYSE: JBL). He notes weak numbers from Jabil's Apple-exposed segments and flat guidance for the units.

Assembly on the new iPhone hasn't started yet, Misek said, but its most likely to begin very soon. He comments, "Trial production and tape-outs are most likely occurring now. We believe the iPhone 5S and low-cost iPhone will most likely launch in Sep and that pushouts are more likely than pull-ins. We still expect an iPad Mini retina in CQ4."

Upgrading to iOS 7 on the iPhone 4 and iPhone 4S will be possible, Misek notes a poor experience due to the operating system putting too much stress on the processor. He thinks iOS 7 might be an attempt by Apple to spur upgrades.

Misek is reducing estimates, with FQ313 revs and EPS moving from $38.3 billion an $7.64 down to $36.6 billion and $7.02. The following quarter revs and EPS drop from $50.8 billion and $11.45 down to $48.3 billion and $10.58.

Apple is down 1.2 percent early Monday.

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 $413.50 yesterday.

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