Wednesday 6 March 2013

Apple targets cut as brokers see slowdown

Citigroup, Barclays see slower iPhone sales in first half of 2013

By Dan Gallagher, MarketWatch
SAN FRANCISCO (MarketWatch) — Apple Inc. saw its shares slip on Wednesday — missing the second day of the Dow rally — as a pair of brokerages cut back their price targets on the stock, citing a belief of a slowdown in iPhone sales during the current quarter.

Reuters Enlarge Image
The iPhone 5, left, and 4S.
Apple AAPL -1.27% shares closed trading down 1.3% to $425.66. The stock had jumped more than 2% on Tuesday with the broad market rally, but has been on a mostly downward slide since hitting its peak just above $700 in late September.
Analysts from Citigroup and Barclays Capital both cut back their price targets on Apple’s shares on Wednesday, as well as their estimates for the company’s second fiscal quarter, which concludes at the end of this month. Citi cut its price target to $480 from $500, while Barclays lowered its target to $530 from $575.
Both brokers cut their sales estimates for the iPhone and iPad by 1 million units for the March quarter. But Citi took a relatively cloudy view on Apple’s near-term prospects, saying its research is “reflecting share loss by Apple in both the tablet market and the smartphone market.”
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The broker maintained its neutral rating on the stock, saying it expects Apple to launch a new iPhone 5S this fall and possibly a larger-screen version later in the year. But it expressed doubt that the company is working on a lower-end iPhone model for developing markets.
“Despite much speculation among investors and third party research, we find limited evidence of a low-end iPhone at this stage,” the broker wrote.
Barclays analyst Ben Reitzes was more bullish on the company, maintaining his overweight rating on the stock. Citing a recent meeting with Apple’s top management, Reitzes said he believes the update to the iOS platform this summer will help the company’s mobile device business.
“However, we do believe that a 5-inch phablet is needed — and Apple should address this need by [the December quarter],” he wrote.
Dan Gallagher is MarketWatch's technology editor, based in San Francisco. Follow him on Twitter @MWDanGallagher.
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