Apple's (NASDAQ:AAPL) target price was
revised down to $790 from $850 by Bill Shope, an analyst at Goldman Sachs, who cited the iPhone and
iPad maker's disappointing June quarter results and guidance as the reason.
In a note to investors on Wednesday,
The firm said that Apple's June quarter revenues at $35.02 billion and earnings
per share at $9.32 were below its estimates of $35.54 billion and $9.98 a
share.
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The company's guidance for the September
quarter at $34 billion on revenues and earnings of $7.65 a share were also
below expectations, Goldman analyst Bill Shope said.
On average, analysts have predicted that
Apple will post $46.79 earnings per share for the current fiscal year.
"While we had expected some weakness
as a result of a pause in iPhone demand ahead of the iPhone 5 refresh, the
impact was greater than we anticipated. In addition, Apple’s gross margin
performance and macro commentary served as key sources of disappointment,"
said the note by Bill, who though has retained a buy rating on the stock.
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But it’s not all bad news. Shope held out
the hope that any drop in share prices would be temporary and the stock would
bounce back fast.
Bill's note, which has been widely picked
up by the analyst community said, "The pause ahead of iPhone 5 was even
more pronounced than expected," and "While several elements of
Apple’s June quarter results were surprising and disappointing to us, we
believe most of these issues are temporary. In fact, we believe the December quarter
will enjoy a tailwind from the iPhone 5 and consumer seasonality that will
likely quickly eliminate current investor concerns. In addition, we saw no
evidence in this quarter’s results that Apple’s platform momentum or the
related customer loyalty and market share potential were damaged in any
way."
The Goldman note also pointed to
lower-than-expected gross margin as a key point of concern. The company
reported a gross margin of 42.8 percent against a consensus estimate of 43.5
percent. This was attributed to lower price realisation as customers opted for
cheaper versions of the phone.
Bill is however expecting a recovery in
margins by December though he viewed Apple's comments on macro-economic
pressures as worrying, especially the impact of Europe on its future
performance.
Shares of AAPL tumbled 4.32% on Wednesday,
its biggest single day fall since Mid October and ended at one month low of
$574.97.
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