Goldman Sachs is sounding the alarm on Apple - demand for new iPhones could be 'deteriorating'
- Goldman Sachs became the latest bank to become more bearish on Apple in a note distributed on Tuesday.
- The analysts said they are worried that "end demand for new iPhone models is deteriorating."
- The note comes days after several reports have come to similar conclusions.
- Apple stock has been sliding since it said it would no longer disclose hardware unit sales earlier this month.
Goldman Sachs analysts have slashed their iPhone unit sales estimate by 6% and downgraded their price target after Lumentum, which makes a part needed for Apple's Face ID camera on the new iPhones, said that a major customer, believed to be Apple, had drastically cut its order.
"To account for this new information, we are reducing our iPhone XR/XS Max/XS units estimate, while increasing estimates of lower priced iPhone units," the Goldman analysts wrote in a note distributed on Tuesday.
"We are concerned that end demand for new iPhone models is deteriorating," the analysts continued. "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."
The note comes days after several reports came to similar conclusions.
JPMorgan analysts said iPhone unit sales could decline on an annual basis in both 2018 and 2019 due to weak demand in emerging markets. TF International Securities analyst Ming-Chi Kuo cut his forecast for iPhone XR shipments from 100 million to 70 million. Nikkei, a Japanese business newspaper, wrote that Foxconn, which assembles the iPhone XR, had cut as many as 15 production lines for the device.
Apple's stock has slid over 10% since November 1, which is when the company said it would stop disclosing iPhone unit sales. Goldman's report is the latest evidence that analysts are now worried iPhone unit sales are going to start shrinking in the short-term, which is believed to be the reason why Apple decided to stop reporting the key metric. Apple said it preferred to focus on its transition to a services company, with regular recurring revenue.
Goldman gave Apple a neutral rating and downgraded its price target to $209 from $222.