According to foreign media reports, the investment company JPMorgan Chase lowered the target price of Apple's stock to $ 335, because the new crown virus epidemic and store closures are expected to have a greater impact on Apple's profits than previously forecast.
JPMorgan Chase estimates that the store closure will disrupt demand in the second quarter, and due to testing issues, the "iPhone 12" may be slightly delayed.
Due to the continuing impact of the coronavirus pandemic, JP Morgan analyst Samik Chatterjee is adjusting his expectations for the "new normal." In a report to investors, he "substantially" lowered Apple's sales expectations for the second quarter of this year.
The analyst assumed that Apple ’s retail stores outside of Greater China will reopen in mid-May, and he lowered Apple ’s sales forecast from 33 million to 15 million. An internal Apple memo previously hinted that the company will start reopening some stores in April.
This is largely due to the closure of the Apple retail store, the “lower store traffic” before closing the store and the possibility of “lower store traffic” after reopening. For example, the analyst expects that Apple ’s physical sales will not return to normal until June. Although Chatterjee believes that Apple's online sales will increase, he added that this may not offset the decline in physical retail channels.
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The financial investment company also considered that there might be a slight delay in the release of the "iPhone 12" this fall. Although the supplier denies any delays in production, Chatterjee estimates that hardware testing issues will affect the release schedule.
Chatterjee expects that overall iPhone sales will drop by 10% compared to the same period last year. This is based on the latest sales estimates for 175 million units in 2020. Chatterjee added that the decline in sales in the second quarter may be “partly offset” by the increase in sales in the fourth quarter.
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JPMorgan Chase still expects that, given Apple's historical dependence on in-store sales outside of the Chinese market, this year's physical sales will see a "substantially similar recovery schedule." Currently, all Apple retail stores in China have opened.
In his last research report, Chatterjee also predicted that Apple ’s sales will be disturbed, although not as much as he now predicts. He then insisted that the company will maintain its strong development momentum and will basically recover in 2021.
The analyst still believes that there are upsides for several aspects of Apple ’s business, including the shift to services, growth in the installed base, technology leadership, and options around capital deployment— “all of which together we expect Apple ’s earnings With double-digit growth, stocks will also be re-rated. "
