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AAPL Stock: 99.02 ( + 1.35 )

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Needham drops Apple stock target to $595 based on tougher competition

updated 03:00 pm EDT, Mon August 12, 2013

Forecast improvement hinges on upcoming iPhone, iPad updates

As part of a semi-annual valuation, investment firm Needham & Co. has cut its price target for Apple stock from $710 to $595. Analyst Charlie Wolf cites a "more hostile competitive environment" since the last valuation in February, along with a shift in shopping habits, both of which are reflected in the fall of the Mac, iPad, and iPhone operating segments. "The largest percentage decline -- 42.3% -- was in the Mac segment as the negative impact of tablets on PC sales became increasingly apparent in the first half of the calendar year," he writes. "The iPad experienced the next largest decline -- 37.2% -- to reflect the decline in the average selling price of iPads as buyers shifted from the 10 inch to the lower margin 8-inch model."

Intense competition is said to have primarily hurt the iPhone, which dipped 15.4 percent. "Expectations for the iPhone are in a sense binary," adds Wolf. "If Apple continues with a single high-end model, the iPhone's market share is likely to decline further. In the event that Apple introduces a less expensive and/or larger iPhone targeting emerging markets, the phone's share would likely increase. But a decline in the iPhone's gross margin that would accompany such a move could offset much of the growth in unit sales."

Apple is believed to be preparing two new iPhones it will announce on September 10th. While one is an evolution of the iPhone 5, the 5S, the other is the 5C, a mid-tier device with a plastic back and some static or scaled-back internal components. While the 5S is predicted to get a 12-megapixel camera with a dual-LED flash, for instance, the 5C may stick to an 8-megapixel sensor and a single LED.




by MacNN Staff

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