Piper Jaffray cuts Apple price target, despite solid U.S. demand

Any bad international news, says analyst Michael Olson, has been baked into the stock.

From a note to clients that landed on my desktop Thursday:

Despite component supplier data points suggesting iPhone weakness, our survey of >550 domestic iPhone owners suggests upgrade intentions are similar to 2017 levels, with an iPhone mix that approximates our estimates.

This survey of U.S. iPhone owners only captures ~50% of iPhone markets and is, therefore, incomplete when looking at the overall business.

Given the solid U.S. demand observed in our survey, weaker iPhone component supplier results must be due to slower int’l uptake. As such, we have slightly reduced our FY19E & ’20E iPhone units, but increased previously ‘below Street’ services revenue.

The end result is FY19 & ’20 overall estimates remain unchanged. Regarding AAPL shares, we believe int’l iPhone weakness and disappointment around lack of future unit disclosure are both largely baked into the stock.

Survey details:

Maintains Overweight rating but lowering price target to $222 from $250.

My take: Looks like a healthy iPhone upgrade cycle. Why the sour face?

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