The shares of Apple Inc. (NASDAQ:AAPL) are trading lower today after analysts at Goldman Sachs trimmed their price target to reflect their lower growth expectation for the smartphone industry.
The stock price of the iPhone maker declined 1.37% to $97.12 per share around 1:21 in the afternoon in New York.
Apple lost more than 7% of stock value year-to-date based on Google Finance. Investors have been concerned about Apple’s future due to the 26% decline of its quarterly revenues from China, which was considered a key growth driver for the company.
Analysts’ forecast on Apple
Goldman Sachs analysts maintained their Buy rating on Apple, but they reduced their price target from $136 to $124 per share. They also estimated that the company will be able to sell 211 million units of iPhone this year, down from their previous estimate of 212 million units.
In a note to investors, the analysts wrote, “We also fine-tune our iPhone forecasts by introducing a detailed regional build, updating our installed base model, and adding an inventory overlay. Even with these assumptions, which we view as conservative, our model implies upside to consensus estimates, and we maintain our ‘buy’ rating.”
The analysts added that they trimmed their estimate because of their expectation for a lower market growth and lower average selling prices due to a bigger shift from developed to emerging markets. They expected the change to drive more sales for the iPhone SE, which has a lower price than the iPhone 7.
Most significant risk
The analysts pointed to the demand environment in China as the most significant risk for Apple. Other risks include the company’s product cycle execution, competition, foreign exchange fluctuation and pace of innovation.
Despite those risks, the analysts suggested that the full-year 2017 sales estimate for the iPhone maker is too low.
According to them, “We continue to view consensus estimates for (full year 2017) as too low, as we expect an increase in upgrades with the iPhone 7 based on the pent-up demand evident in our recent U.S. consumer survey, combined with our estimate of 26 percent year-on-year growth in the iPhone installed base as of September 2016.”
Meanwhile, in an interview with CNBC, Peter Toogood, an investment director at City Financial Investment Company, commented that Apple is “going to move into the cash cow territory.” He added, “Where is the new blockbuster? It is very hard to see. Apple TV, watches? A different kind of growth profile and nowhere near what you had before.”