Yet Another Analyst Cuts Apple's iPhone Estimates

UBS also trimmed its AAPL price target to $225

Patrick Martin
Nov 14, 2018 at 10:25 AM
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The shares of Apple Inc. (NASDAQ:AAPL) initially ticked higher out of the gate on broad-market tailwinds, but was last seen down 0.4% to trade at $191.45. The FAANG stock was downgraded to "neutral" from "buy" at Guggenheim, which also removed its $245 price target on the equity. This is the second brokerage firm in as many days to predict a decline in iPhone sales for 2019. In addition, UBS trimmed its price target to $225 from $240, and cut its current-quarter iPhone unit sales estimates. 

Today's downside puts Apple stock one step closer to its seventh straight weekly loss, which would mark its longest weekly losing streak since 2012. Plus, the equity is at risk of closing a second straight session below its 200-day trendline, which hasn't happened since April. Nevertheless, AAPL is still holding on to a 13% lead year-to-date and appears to have found support at the $190 level, an area that coincides with its late-July pre-bull gap. 

And despite the recent flurry of bear notes, analysts for the most part are evenly split toward the FAANG name. Of the 27 brokerages covering AAPL, a little less than half rate it a tepid "hold." On the other hand, the equity's average 12-month price target of $234.42 is a 22.4% premium to its current perch. 

Those wanting to buy options to bet on AAPL's short-term trajectory will have to pay up, though. The security's 30-day at-the-money implied volatility (IV) checks in at 30.7%, in the 88th annual percentile, meaning near-term bets are pricing in higher-than-normal volatility expectations. As such, a premium-selling strategy could be more appropriate at this time.

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