Merrill Lynch’s downgrade late last year was predicated on a weaker China but demand seems to have deteriorated materially over the past two months.
Bank Of America Merrill Lynch
This analyst report was written by Wamsi Mohan
Rare miss but weakness likely to extend beyond Dec qtr
Apple stock is down approx. 7% after market following the negative preannouncement. Although the trade tensions with China could ease in 1H19, the broader demand weakness and slower upgrade cycles are likely to push units much lower in F19 (we now model 181mn units down from 210mn previously). Our downgrade late last year was predicated on a weaker China but demand seems to have deteriorated materially over the past two months. We remain Neutral as we expect further consensus negative revisions to continue to pressure the stock in the near term, although our scenario analysis suggests the stock is discounting structural declines in hardware and strong services deceleration.
Cutting Q1 rev guid. by $7bn, mostly due to China, iPhone
Apple updated revenue guidance of $84bn is $7bn (7.7%) lower than the $91bn +/-$2bn midpoint provided in the F4Q18 earnings announcement. Apple noted that over 100% of the y/y rev decline (above $4.3bn / above 60% of $7bn cut) Click here to read entire article