Apple stock took a hit on Tuesday after a Wall Street firm lowered its estimates for the company’s March quarter, citing lower iPhone sales and weakness in China. Needham analyst Laura Martin reduced her estimates for Apple’s fiscal second quarter but kept a buy rating on the stock, noting that the company is facing significant challenges. The analyst mentioned that Apple’s growth outlook is weak, and there are expected cost increases to fund GenAI (generative artificial intelligence).
The latest sales-channel checks showed decreased iPhone sales, although revenue from iPad and Mac computer sales was slightly higher than anticipated. For the March quarter, Martin predicts that Apple will report hardware sales of $67.6 billion, down 9% year over year, and services sales of $23.3 billion, up 11%. She expects iPhone sales to total $46.6 billion, down 9% year over year, and earnings per share of $1.51, down 1%, on sales of $90.8 billion, down 4% for fiscal Q2.
Martin also adjusted her revenue and earnings targets for Apple for this fiscal year and the next. Apple stock decreased by 1.9% to close at 169.38, with Martin holding a price target of 220. Year to date, Apple stock is down 12%, while the S&P 500 index is up 5.9%. Apple is set to report its fiscal Q2 results on May 2. For more stories on consumer technology, software, and semiconductor stocks, follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz.