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RBC cuts Apple target to $130, expects iPhone sales 'noise' to last through March quarter

RBC Capital Markets on Thursday became the latest investment firm to cut its estimates for Apple, joining the chorus of concerns that Apple could post its first-ever year over year decline in iPhone sales.




Analyst Amit Daryanani now believes Apple will ship 45 million iPhone units in the current March quarter, which is considerably below buy-side expectations on Wall Street, ranging from 50 million to 58 million.

To put Daryanani's estimate into perspective, Apple sold a massive 61 million iPhones in the March quarter of 2015. Shipments of 45 million in the March 2016 quarter would be a major 26 percent year over year decline.

His new estimate came from "discussions with a host of supply chain companies," he said in a note to investors, a copy of which was provided to AppleInsider.

To him, shares of AAPL will remain "range-bound" until the end of the March quarter. Beyond that, he sees iPhone sales returning to growth in the second half of calendar 2016, and potentially even in the June quarter.

Apple's production cuts are aimed at optimizing retail inventory, Daryanani believes. And while he cut his estimates, Daryanani said much of the discussion about Apple on Wall Street is simply "noise" that he believes will fade.

Daryanani still believes investors should buy in on Apple stock due to a number of factors, including higher average selling prices on iPhones and iPads, a potential 4-inch iPhone refresh targeting new price points, and higher gross margins.

However, despite maintaining an "outperform" rating, RBC has lowered its price target on AAPL to $130. That's down from its previous target of $140.

Shares of AAPL have taken a beating in recent weeks, following reports from a number of Apple suppliers who expect slower sales to start the new year. While none of the suppliers have specifically mentioned Apple, accompanying reports have claimed that Apple has cut new orders for its flagship iPhone 6s series in response to slower-than-expected sales.

Investors have been concerned that the astonishing growth seen by the iPhone since its launch in 2007 is coming to an end. Speculation about "peak iPhone" sales has been attributed to recent struggles for AAPL stock.

Most analysts on Wall Street continue to stand by Apple as a solid investment, though they do believe a first-ever year-over-year decline in iPhone sales is a real possibility in 2016. Expectations for the anticipated "iPhone 7" refresh, however, remain sky-high, with analysts predicting the iPhone will return to growth with a redesigned model this fall.