Apple Estimates Updated by Analysts Following Sales Warning

Wall Street's analyst community expected the coronavirus impact, which has led to only slight updates to forecasts of the tech giant's results.
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Apple  (AAPL) - Get Report shares are lower after the tech giant warned that the fallout from the coronavirus will cause the company to miss sales expectations when it reports fiscal-second-quarter results on April 28.

The analyst community was quick to publish numerous notes updating forecasts for the Cupertino, Calif., company. 

Most analysts remained bullish on Apple's outlook heading into its second half, as effects from the pandemic are expected to abate.

Analysts at Morgan Stanley expect the company to aggressively buy back shares on any pullback in the price. 

The firm affirmed its overweight rating on Apple. But it also estimates that Apple will end the March quarter with three weeks of iPhone channel inventory versus the normal six weeks, representing a $7.5 billion revenue shortfall in the quarter.

Barclays lowered its price target to $297 from $304 on the revenue warning while maintaining its equal-weight rating. 

Earlier this month, the firm lowered its global smartphone unit forecasts by 9% for first-quarter 2020 and 5% for Q2 to reflect the coronavirus impact on the industry. The firm also lowered Apple iPhone unit sales forecasts by 9% and 7% over the two quarters.

Canaccord Genuity reiterated its buy rating while reducing its price target to $345 a share from $355. 

The firm now expects March-quarter iPhone unit sales of 38 million, down from its previous estimate of 46 million. Meanwhile the firm reduced its 2020/2021 earnings-per-share estimates to $14.09/$16.76 from $14.76/$17.16.

The cuts stemmed from Canaccord analysts belief that "Apple is well positioned for strong trends across all its business lines.”

JP Morgan analysts remained bullish on Apple thanks to expected strong demand for 5G-enabled iPhones. But the firm is “now forecasting much lower fiscal 2020 second-quarter volumes” with a more modest reduction in third-quarter volume estimates.

JP Morgan lowered its iPhone volume forecast to 39.5 million units in the second quarter from its previous view of 47.5 million.

And analysts at Piper Sandler see a silver lining in Apple’s announcement, saying “the iPhone supply constraints in the current quarter could result in pent-up demand for future quarters.”

As a result, the firm affirmed its overweight rating and $343 price target. 

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