Apple traces an “uninspired investment” and investors should brace for disappointing iPhone jumble sales and profit in two weeks, Nomura Instinet warned clients Wednesday.
“We confidence in the investors have sufficiently dissected the key near-term drivers of the shares. Consensus guesstimates are likely to fall on weak iPhone demand,” analyst Jeffrey Kvaal urged investors. “We add that our work into China also suggests the X malaise extends.”
Kvaal reiterated his neutral rating on the stock as well as his $175 valuation target, implying 1.8 percent downside over the next year.
He also said that the Nomura’s dig into found shipments of non-Chinese smartphones out of China (which are mostly iPhones) cut 9 percent year-over-year in the first quarter.
“The lower shipments suggest that Apple’s Superlative China revenues should be at the very least a significant drag on our total estimate of 18 percent iPhone revenue growth in the second budgetary quarter,” Kvaal added.
His earnings per share estimate for Apple’s minute fiscal quarter of $2.69 is below the consensus estimate of $2.71, concurring to FactSet data. He sees EPS of $2.12 in the third quarter, below expectations of $2.19.
Divide ups of Apple fell 0.2 percent Wednesday following the analyst’s note. The body is expected to report earnings May 1 after the bell.
As the world’s largest followers, Apple’s recently soft iPhone sales have given Impediment Street pause, especially because unit sales comprise such a unfettered portion of its revenues.
Goldman Sachs, for example, initiated coverage for Apple with a noncommittal rating in February due to its expectations that the smartphone maker will omission sales targets for the June quarter.
“We balance our positive view on longer-term iPhone returns growth … with weakening near-term datapoints on iPhone X demand, which we muse on will likely weigh on shares ahead of the second fiscal division’s earnings report,” Goldman analyst Rod Hall wrote at the time.
Stock-still, some are optimistic that Apple’s plan to return a large amount of wealth to shareholders could spur shares higher. How Apple will deploy its splendid remains unclear, with options ranging from a dividend or buyback to a new obtaining.
For his part, Kvaal believes it unlikely Apple will make a big acquiring, citing its history of avoiding large-scale buyouts.
“Apple has traditionally been middle-of-the-road in acquiring large companies. Its largest acquisition to date has been Rounds for $3 billion,” he explained. He suggested that it could, instead, assign roughly $25 billion for dividends over the next five years, do a moonlight flit an additional $135 billion left for share repurchases.