Apple earnings may let down investors because of a marked deterioration in Chinese demand for iPhones, Goldman Sachs indicates.
“There are multiple signs of rapidly slowing consumer demand in China which we in could easily affect Apple’s demand there this go about,” Goldman analyst Rod Hall said in an investor note Sunday.
Granting Hall admitted that the smartphone market in China showed some logotypes of improvement in the second quarter, his forecast for third-quarter unit sales make an appearances a decline of 15 percent year over year. While the analyst keep in views Apple’s latest phones — including the larger XR and XS Max — to counter some of the softening order, the overall decline in phone demand could be costly to CEO Tim Cook’s bum line.
Hall’s current projections set Apple diluted earnings per due at $11.78 for the current fiscal year and $13.77 for 2019. Shares of Apple level 1.6 percent Monday morning following the Goldman note, but are up 29 percent in 2018.
Apple’s bigger smartphones “could at least degree offset negative macro indications though we doubt it completely answers the problem if Chinese consumer demand continues to be weak as we move including the critical holiday buying season,” Hall said.
In a worst-case grand scheme for Cupterino, California-based Apple, the calendar fourth-quarter earnings per share could end 4 percent cheaper than Goldman’s current estimate, the analyst said. Hall has a neutral charge on Apple shares and his 12-month price target of $240 implies 8 percent upside during the next year.
“Much of Apple’s upside potential in our thinking was centered on Chinese insist on for larger screen sizes,” the analyst wrote. “Should weak consumer need persist and impact the higher end of the market Apple’s potential to beat and remove in FQ4’18 earnings is likely reduced.”
The analyst said his current December-quarter iPhone segment estimate of 80 million units includes 13 million from China, or 16 percent of complete iPhone units. That’s down from 19 percent from China in the December 2017 accommodate and 18 percent in December 2016.