Apple (AAPL) - Get Report shares were affirmed overweight by a top industry analyst, Morgan Stanley's Katy Huberty, who cut her price target 9% as consumer spending weakens and many Apple stores stay closed during the coronavirus pandemic.
And Credit Suisse's Matthew Cabral affirmed Apple shares neutral and cut his target price to $260 from $290.
Huberty cut her price target to $298 a share from $328. This was her third price-target cut on the Cupertino, Calif., company this year.
Uncertainty in the current market is "significant," she wrote. And she is cutting her earnings estimates to reflect "a weaker consumer in fiscal years 2020 and 2021."
Nonetheless, "while there is always risk that earnings could surprise negatively if social -distancing measures last longer or consumer balance sheets deteriorate more, [Apple] is best positioned to recover to its prior long-term revenue and earnings trajectory," she wrote in a report.
That's "in light of industry leading customer retention rates and a strong balance sheet that enables outsized investment relative to peers, even in a prolonged downturn."
The analyst expects Apple to continue buying back $20 billion of shares quarterly and paying out its $14 billion of annual dividends, "equaling a 9.1% total cash return yield in fiscal 2020," she said.
Analyst Cabral at Credit Suisse wrote that Apple stock outperformed CS’s coverage since the market peaked in February.
“[We] can appreciate the flight-to-quality argument, particularly with Apple’s fortress of a balance sheet ($207 billion gross cash, $99 billion net),” he wrote.
“That said, the stock’s still not `cheap’ at 17 times our new calendar-year 2020 earnings-per-share [estimate], especially given our view that iPhones are a large discretionary purchase at risk of being postponed (i.e., further extension in the replacement cycle) against a backdrop of weak consumer spending, even with the addition of 5G.”
Meanwhile, a top Apple human resources executive informed employees, via a memo, that the company's 270 retail stores in the U.S. will remain closed until at least early May, with work-from-home procedures also in place for the next month as well, Bloomberg reported.
Apple had previously told employees that some stores outside the U.S. might reopen in mid-April.
At last check Apple shares were trading off 0.9% at $242.86.