Apple Slumps After Rosenblatt Downgrade, 'Disappointing' iPhone Sales Forecast - TheStreet

Apple Inc. (AAPL) - Get Report shares traded lower Monday after analysts at Rosenblatt Securities downgraded the stock amid concern for weakening iPhone demand and slower service revenue growth over the second half of the year.

Rosenblatt cut its rating on Apple to "sell" from "neutral", but maintained its $150 per share price target, citing what it sees as a "fundamental deterioration over the next 6 to 12 months" for the iPhone maker, which reports third quarter earnings on July 30.

"Adding to our 'sell' thesis, we believe new iPhone sales will be disappointing, iPad sales growth will slow in the second half of 2019, other product sales growth, such as the HomePod, AirPod, and Apple Watch, may not be meaningful to support total revenue growth," said Rosenblatt's Jun Zhang.

Apple shares were marked 2.37% lower Monday to change hands at $199.40 each in early trading, a move that would still leave the stock with a one-month gain of around 16%.

Apple shares could also be pressured from Friday's profit warning from Samsung Electronics (SSNLF) , which indicated that the U.S. blacklisting of China's Huawei Technologies and a glut in global semiconductor markets continues to hit the bottom line of the world's biggest smartphone chipmaker.

Samsung said it sees second quarter profits falling 56% from last year to 6.5 trillion Korean won ($5.6 billion, a modestly better-than-expected figure that was flattered by one-time boosts in its business display division, but still the third straight year-on-year slump in bottom line profits. Group revenues, are likely to fall 4.2% to 56 trillion Korean won, Samsung said in its traditional pre-earnings forecast. Official figures are expected on July 31.

Samsung said it sees second quarter profits falling 56% from last year to 6.5 trillion Korean won ($5.6 billion), a modestly better-than-expected figure that was flattered by one-time boosts in its business display division, but still the third straight year-on-year slump in bottom line profits. Group revenues, are likely to fall 4.2% to 56 trillion Korean won, Samsung said in its traditional pre-earnings forecast. Official figures are expected on July 31.

Huawei Technologies, Samsung's biggest customer, is likely buying fewer chips from its global suppliers following a U.S. blacklisting of the China-backed group last month which prevents it from doing most of its business with American firms. White House officials are also pressing global security allies such as Britain, Germany and Australia to exclude Huawei from having any significant role in the construction of 5G networks.

Last month, U.S. chipmaker Broadcom Inc. (AVGO) - Get Report said that a prolonged U.S.-China trade war, as well as the extended blacklisting of Huawei, would disrupt global chip demand and clip its near-term profit potential.

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