Apple (AAPL) Shares Will be 'Challenged' as Results Fall Short of High Expectations - Deutsche Bank
Deutsche Bank maintained a Hold rating on Apple (NASDAQ: AAPL) with a price target of $125. Analyst Sherri Scribner commented on the stock following the release of Apple's Q3 results, noting difficultly the company is having meeting high Street expectations. Scribner also pointed out ongoing concerns about peaking smartphone market share.
"AAPL's F3Q-15 revenue, EPS, and GMs were above Street Consensus, but below investor expectations. iPhones units in particular missed buyside expectations, which we believe were for 50-52M shipments. Given iPhone drives the vast majority of sales and profit, softer iPhone units were a disappointment," said Scribner.
"We continue to remain concerned that AAPL's smartphone market share is peaking, and expect iPhone unit growth to decelerate next year on more difficult compares. With shares trading near historical average PEs, we view valuation as fair and reflective of the slower growth potential in FY-16," continued the analyst.
Scribner added, "While results modestly beat published estimates, iPhone and Mac units were only in line with Street estimates and iPad modestly missed. We estimate that Watch shipments were roughly 2.7M in F3Q-15, which was also lower than Consensus expectations of 3.9M units. With results only meeting Street expectations and missing higher investor expectations, we believe the shares will be challenged. We continue to worry that recent iPhone strength and high market share are unsustainable, and we expect growth rates to decelerate as we anniversary the iPhone 6/6+ introduction later this year."
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Shares of Apple closed at $130.75 yesterday.