Friday, December 14, 2012

Apple's stock drops to its lowest level since February

Apple's stock dropped to a ten-month low on Friday, after a number of announcements and developments arose to shake investor confidence in the once-$700+ stock.

First off, UBS analyst Steve Milunovich issued a cautionary research note on Apple shares late on Thursday. While he still maintains a Buy rating for the stock, he trimmed his estimates and reducing his target stock price from to $780 from $700.

Next, on Friday morning, Jefferies analyst Peter Misek wrote in his own research note that iPhone component suppliers “have seen large order cuts” over the past 24-48 hours. Misek added that “assembly execution issues are taking longer to resolve than expected.”

As a response to that, Misek cut his gross margin forecast for the December quarter from 40 percent to 39 percent, which, it should be noted, is still above the Street consensus of 38.6 percent. Misek continues to project 53 million iPhones for the current quarter, which is also above the Street consensus, which is in the 46-48 million unit range.

He also reduced his forecast for calendar Q1 iPhone shipments. Misek trimmed his iPhone estimate for the March quarter from 52 million units to 48 million units, while at the same time reducing his gross margin forecast to 40 percent, down from 42 percent.

However, despite the less than fantastic forecast, Misek added that he still believes that Apple's financial results will beat the market consensus for both the December and March quarters.

One more tidbit of information from Misek that affected Apple's stock price: the debut of the iPhone 5 in China wasn't exactly boffo. He said, "The iPhone 5 China launch has been surprisingly muted but (we) are unsure how much weather (snow) or the required pre-ordering (to prevent riots) are factors."

Apple dropped to $509.79 on Friday, its lowest level in 10 months.

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