HSBC is worried about Apple’s future

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iPhone X-R-llent.
HSBC has previously said iPhone's days of massive growth are over.
Photo: Apple

Apple stock seems to have stabilized after its steep decline in recent weeks, but HSBC analysts seemingly don’t think the worst is over just yet.

Having previously said that meaningful iPhone growth is “broadly over,” analysts for the bank have now lowered their Apple price target for a second time.

“Although we had expected challenges for Apple in China and other economies, the intensity has surprised us to the downside,” HSBC analysts led by Erwan Rambourg noted this week in a report to clients. The downgrade comes after Apple reportedly reduced the number of iPhones it is manufacturing yet again.

The firm has lowered its revenue estimates for 2019 through 2021 by 5-7 percent, and Apple’s net income estimates by 8-9 percent. HSBC’s target price for Apple now stands at $160 a share. Currently the company is trading at $153.31.

Erwan Rambourg suggests that it will be difficult for Apple to “dramatically” raise its average selling price (ASP) of the iPhone in coming years. As Apple’s switch from reporting unit sales to ASP shows, Apple has tried to push iPhone prices to make up for shrinking numbers of new customers.

HSBC currently has a “hold” rating on Apple’s stock, instead of its previous “buy.” Some critics have blasted analysts for refusing to recommend that their clients sell Apple stock, despite its recent tumble. An interesting CNBC (if contentious) editorial from this week, titled “Apple analysts have let down their clients but this shouldn’t be a surprise” suggests that doing this is a disservice to investors.

Source: Business Insider