Citigroups Glen Yeung is among three analysts who today cut their estimates and price targets for Apple (AAPL), warning of product gaps and the diminishing returns from the smartphone and tablet market.
Apple shares today are down $5.34, or 1.3%, at $425.80.
Yeung, who has a Neutral rating on shares of Apple, cut his price target to $480 from $500, after cutting the current quarters estimate to $40.45 billion, gross margin of 37.9%, and EPS of $9.23 from a prior $42 billion, 38%, and $9.73. He also cut full-year 2013 and fiscal 2014 and 2015 estimates.
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In conducting our regular field work with the hardware supply chain, we again find evidence of reduced demand to Apples suppliers for iPhone5 related components. While production does not directly translate to sales (for example, we estimate Apple finished 1Q13(Dec) with ~10M iPhone units in inventory), we suspect this is an indication of softer demand for iPhone5 and iPhone4S. To be sure, we expect iPhone5S to be introduced in 4Q13(Sep) (slightly later than our initial expectations of ~June), suggesting iPhone5 production slowdowns now could be clearing inventories ahead of the iPhone5S launch. But with small volumes of iPhone5S expected to be built in 3Q13(Jun) (we estimate 3-4M units), we suspect this effect is minimal (we expect iPhone inventories to be reduced to 5M units from 10M).
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