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For the second time this week, an analyst gave a downgrade to Apple Inc.
Street Research's new analyst, Pierre Ferragu, downgraded Apple
AAPL, -0.80%
On Friday, neutral stocks were sold, expressing concerns about iPhone demand trends.
"The air pocket we had planned for 2019 is now real, and the numbers suggest that the installed base of first-hand on the iPhone is now growing," Ferragu said.
He argued that while analysts have lowered their revenue expectations for Apple this year, the consensus still seems too optimistic about a third-quarter fiscal recovery, which ends in June. It's based on his understanding of the iPhone's previous cycles.
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"In the [fiscal-year 2016] after the launch of the iPhone 6S +, iPhone shipments began to recover against typical seasonality [fiscal fourth-quarter 2016], but the consensus is now waiting for iPhone shipments to recover in [fiscal third-quarter 2019], more than 4 points above typical seasonality, and a more sustained recovery [fiscal fourth-quarter 2019]", Wrote Ferragu. "We see a risk on [fiscal third-quarter 2019] expeditions, and expect a recovery only in [fiscal fourth-quarter 2019] as observed in [fiscal-year 2016].
Wall Street has recently been optimistic about Apple's service sector, which is starting to disclose a little more information about this growing industry and is preparing to launch a suite of new subscription services more late in the year. Ferragu is less optimistic than some other analysts.
"Positive confidence in the services and potentially positive numbers on this front could save the situation, but do not create additional positive risk on the current valuation," he wrote.
Earlier this week, HSBC downgraded Apple's shares to reduce them. Shares rose 0.1% in morning trading on Friday and gained 31% in the last three months.
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