Apple (AAPL) Stock Price Target Cut Ahead of Q3 Earnings, Jim Cramer: 'Be Careful'

Apple (AAPL) stock's price target was trimmed by $2 and its estimates were cut ahead of the company's third quarter results.
By Rachel Graf ,

NEW YORK (TheStreet) -- Apple (AAPL) - Get Report stock's price target was lowered to $116 from $118 in a note released earlier today at BMO Capital Markets, which maintained its "outperform" rating.

The firm also reduced its fiscal 2016 and fiscal 2017 earnings estimates given lower margin expectations. 

For the third quarter, BMO anticipates corporate gross margin of 37.5% vs. consensus of 38.3%.

"We believe the dilution from the iPhone SE was more pronounced in June, and September will be more driven by initial volume and gross margin on the iPhone 7," the firm noted.

BMO consequently trimmed its fiscal 2016 earnings estimates to $8.28 per share from $8.37 per share and its fiscal 2017 estimates to $9.13 per share from $9.33 per share.

TheStreet's Jim Cramer said in a video this morning that the BMOnote was very typical, given all the "faux buy" ratings currently on Apple stock. 

"I am adamant and will continue to be adamant that this is not a good quarter," Cramer noted. "And those who think they can ramp from this quarter will either have to know something about the iPhone 7 that I don't know or that the service stream has really exploded."

He pointed out that shares have been rising in large part on the success of Pokemon Go.

The Cupertino, CA-based iPhone maker is scheduled to report 2016 third quarter earnings after Tuesday's market close.

Shares are sliding 0.05% to $99.91 this morning.

(Apple is held in Jim Cramer's charitable trust Action Alerts PLUS. See all of his holdings with a free trial.)

Separately, TheStreet Ratings team rates the stock as a "buy" with a ratings score of B.

Apple's strengths such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins outweigh the fact that the company shows weak operating cash flow.

You can view the full analysis from the report here: AAPL

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author. 

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