Mumbai, Jan. 24, 2012 – Weaker-than-expected holiday sales of Apple Inc.’s iPhone reinforced fears that it is losing its dominance in smartphones, driving its shares down 9 percent in pre-market trading and drawing another round of stock price target cuts.
Fourteen brokerages including Barclays Capital, Mizuho Securities USA, Credit Suisse, Deutsche Bank, Raymond James, Robert W. Baird & Co and Canaccord Genuity cut their price target on the stock by $142 on average to $599.
Apple’s shares closed at $514 Wednesday on the Nasdaq. Jefferies & Co cut its rating on Apple’s stock to “hold” from “buy” and slashed its share price target by $300 to $500.
Jefferies analyst Peter Misek, who has previously raised red flags about Apple cutting orders to suppliers, said the iPhone slowdown was “real and material” and here to stay.
“We think Apple is losing the screen-size wars,” Misek said, noting that demand was moving away from the iPhone’s 3.5-inch and 4-inch screens to screens of 5 inches offered by rivals such as Samsung Electronics Co Ltd, HTC Corp and Nokia Oyj.
Misek is a top-rated analyst for the accuracy of his earnings estimates for Apple, according to Thomson Reuters StarMine. Apple said it shipped a record 47.8 million iPhones in the December quarter, but this trailed the average analyst forecast of 50 million units.
Deutsche trimmed its price target to $575 from $800, and said Apple should start making a lower-priced iPhone to arrest the market share loss.
Credit Suisse analysts said a new product cycle and wider telecom carrier selection could be possible catalysts for the company, but added that these were not imminent.
“We believe a lower ability to beat earnings per share expectations, and some concerns on demand, may weigh on the stock near-term,” said Credit Suisse, which cut its target price by $150 to $600.
Up to Wednesday, 24 analysts had lowered their price targets since October when Apple reported its fourth-quarter results, according to Thomson Reuters data.
Apple is the lowest ranked stock among the marquee technology firms in the United States based on the change in analyst sentiment, or Analysts Revision Model (ARM), according to StarMine.
Apple’s global ARM score of 10 is well below Google Inc’s 34 and Microsoft Corp’s 19 out of a possible 100. Nokia and Samsung have scores of 82 and 89, respectively.
Research in Motion Ltd has a perfect score of 100, according to the model, which measures analysts’ revision of key indicators such as earnings and revenue estimates and changes to their ratings.
Apple shares were trading at $468 before the bell.