Barclays Cuts Apple Price Target Again Amid Bleak Handset Outlook

9:01 am, November 17th, 2008, Ed Sutherland

For the second time this month, Barclays Capital’s Ben Reitzes reduced his target price for Apple shares. Citing lower handset expectation and increased pressure on higher priced products, Reitzes

Photo: Cishore/Flickr

On Nov. 7, Reitzes trimmed his target price for Cupertino shares to $121 from $125.

The Barclays analyst told investors he expects a two percent drop in first quarter 2009 earnings to $9.4 billion, down from $9.6 billion. Apple may earn $34.4 billion for 2009, a drop from $35.7 billion previously expected. In fiscal 2010, Apple earnings could rise 18 percent to $40.55 billion, a drop from $42.8 billion early estimated.

The analyst Monday pointed to fellow analyst Jeff Kvall’s reduced estimate for global handset demand. Kvall now sees handset sales falling three percent for the fourth quarter, a near reversal from a four percent gain previously forecast.

Along with trimming his target price for Apple shares, Reitzes also lowered his iPhone projection to the first quarter of 2009 to 4.5 million units , down from 5 million.

Earlier this month, the analyst cut his iPhone estimate to 5 million handsets, lower than 6.2 million phones previously projected.

In addition to trimming iPhone growth, the analyst halved expected Mac sales for the first quarter to a four percent gain, down from a prior 8 percent upswing forecast.

“Ben Reitzes is simply being overly bearish,” independent Apple analyst and blogger Andy Zaky told Cult of Mac. Reitzes is not including Apple’s massive $880 million in deferred iPhone sales, Zaky explained. Such deferred income means Apple will have huge fiscal 2009 earnings before selling a single product. Apple earned $9.6 billion in fiscal 2008 when it had just $86 million in income differed from the first quarter.

Zaky initially estimates Apple will report selling around 8 million iPhones for the first quarter of 2009.

Joining that bullish estimate is Gene Munster, Piper Jaffray’s Apple watcher. Munster continues to expect 6.4 million iPhones for December and projects a 5-15 percent drop in iPhone growth for the quarter - far less than a 40 percent production drop projected earlier this month by Friedman, Billings and Ramsey.

After watching Apple store activity, Munster said Monday he noted 28 iPhone sales per store daily, a drop from 95 handsets per day in July.

That sales slip may be balanced by increased international demand for the Apple handset, Munster believes.

Posted by Ed Sutherland in News, iPhone | Comment on this article