This analyst called Apple's bombshell holiday quarter miss way back in November

Tim CookGetty

  • Apple slashed its revenue estimate for its all-important holiday quarter on Wednesday, blaming weak iPhone demand in China. 
  • The stock got crushed in after-hours trading, opening over 8% lower on Thursday.
  • Goldman Sachs analyst Rod Hall made several prescient calls about Apple stock back in November, including warning that demand for new iPhones was "deteriorating." 
  • Now he's the most bearish analyst covering Apple on the street. 

Apple CEO Tim Cook delivered a bombshell on Wednesday, revealing that iPhone sales were down, and that revenue in the holiday quarter would be at least $4 billion less than it previously said. 

The surprise announcement was a bad sign for the stock, and analysts from Bank of American, Morgan Stanley, JP Morgan, and other major banks rushed to downgrade their ratings for the stock.

The bank with the lowest current target price for Apple stock is Goldman Sachs, according to Bloomberg data, whose analyst Rod Hall downgraded the stock and placed on it a price target of $140.

It's a bold call, but Hall and his team have been making bold calls on Apple since November, when Goldman downgraded Apple not once, but twice. And the commentary it provided now seems prescient after Wednesday's shock. 

Rod HallGoldman Sachs analyst Rod Hall.Goldman Sachs

On November 12, when Apple was trading at about $194, Goldman cut its price target from $222 to $209. On November 20, Goldman slashed it again, down to $182. "We are concerned that end demand for new iPhone models is deteriorating," Hall wrote at the time, warning that Apple may have "miscalculated" its iPhone strategy. 

A week later, Goldman laid out an argument that seems to track Cook's January 2 letter pretty closely. 

We flagged this risk in our October 15th Apple preview due to rapid smartphone demand deterioration in China. This now seems to be playing out but there are a few additional twists that we see as important. In addition to weakness in demand for Apple's products in China and other emerging markets it also looks like the balance of price and features in the iPhone XR may not have been well-received by users outside of the US. Historically, a disproportionately large chunk of December quarter demand tends to come in the two-week period beginning a week before Christmas day so it is possible that things change though we do not believe this is likely. Our estimates remain at the lower end of Apple's guidance range at this point as we believe the company likely included this more negative scenario in its provided range.

Even Apple fans are noticing. "One analyst who definitely got it right, though, was Rod Hall at Goldman Sachs. His research note downgrading Apple back on November 20 looks remarkably prescient today," the influential Apple blogger John Gruber wrote on Thursday. 

So what does Hall see for Apple stock going forward? He declined to comment beyond his published research, but in a note distributed on Thursday he and his team warned of "further downside" to 2019 revenue and compared Apple to Nokia in 2007. 

"We have been flagging China demand issues since late September and Apple's guidance cut confirms our view. We do not expect the situation to get better in March and would remain cautious on the region," Hall wrote in the note.

He's now the most bearish Apple analyst at a major bank, having slashed his target price for the stock nearly 37% since November. As investors wonder if Apple has hit the bottom, Goldman is laying out the bear case - and it's been right a lot recently. 

Get the latest Goldman Sachs stock price here.

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