Analysts Rush to Adjust Apple Price Targets After Revenue Warning

Apple CEO Tim Cook blamed U.S.-China tensions for the downward guidance

by Patrick Martin

Published on Jan 3, 2019 at 9:39 AM

The shares of Apple Inc. (NASDAQ:AAPL) are down 9.3% to trade at $143.30 -- fresh off an 18-month low of $143.19 -- after the company cut its revenue forecast for the holiday quarter to $84 billion from a previous range of $89 billion to $93 billion last night -- below the consensus estimate of $88.05 billion. CEO Tim Cook cited trade tensions between Washington and Beijing and weak iPhone demand in China as two catalysts.

In response, a slew of analysts have revised their positions. Macquerie and Jefferies downgraded the FAANG stock to the equivalent of a "hold," while no fewer than 17 brokerages issued price-target cuts -- the worst coming from New Street Research, which slashed its target to $140, despite upgrading the equity to "neutral."

This is pacing to be Apple stock's worst day since Jan. 24, 2013, when it slid 12.4%. The shares are fresh off their worst quarter since September 2008 -- shedding 30.1% over the October-December period -- and faced stiff pressure from their descending 10-day moving average during this time frame. 

Just last week, D.A. Davidson and Barron's took the bullish route on Apple, but the overall analyst picture is much murkier. As of yesterday, 14 brokerage firms held on to "buy" or better ratings, while 14 others maintained a "hold" stance, with zero "sells" on the books. However, AAPL's consensus 12-month price target stands at $187.53, a 30.7% premium to current trading levels.

In the options pits, the security's Schaeffer's put/call open interest ratio (SOIR) comes in at 0.71, which ranks in just the 2nd percentile of its annual range. In other words, short-term options traders are more call-skewed than usual at the moment.

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