Apple shares were downgraded on Wednesday by a Wall Street analyst who predicted a 5 percent decline in iPhone units sold in 2019.
According to a new report from CNBC, Guggenheim Partners analyst Robert Cihra cut his rating on Apple stock from buy to neutral and strip away his $245 USD share price target.
Cihra said that even though he expects the introduction of new iPhones, such as the iPhone XS Max, with its $1,099 USD starting price, to boost average iPhone selling prices by 3 percent next year, he anticipates overall iPhone revenue to decline by 2 percent on a year-over-year basis.
Cihra also noted that by putting more emphasis on higher-priced iPhone likes the iPhone XS Max, Apple is potentially setting itself up to miss out on business in China and India, two of the company’s key overseas markets.
“We see growing risk of even softer iPhone unit demand,” Cihra said. “With downside in China, India and other emerging markets, where Apple may need to start considering lower price points.”
Apple shared dropped by 5 percent on Monday after one of it suppliers, Lumentum, announced that one its largest customers had reduced shipments. Lumentum makes 3D sensing lasers integral to Apple’s Face ID system integrated into its high-end iPhones.
Goldman Sachs slashed its iPhone estimated and lowered the Cupertino company‘s price target from $222 to $209 following the news.
“We are concerned that end demand for new iPhone models is deteriorating,” Goldman said in the note. “We note this could easily right itself given the bulk of demand comes in late December but we feel more prudent sell through forecasts are warranted due to the timing and magnitude of this warning.”
Apple also created speculation about its future iPhone sales when, earlier this month, it said it would no longer give quarterly unit sales figures for iPhones, iPads and Mac computers.
At that time, Apple reported fiscal fourth-quarter sales of $62.9 billion USD, with $37.19 billion of that revenue coming from 46.89 million iPhones sold.