Apple downgraded to sell by Goldman Sachs as virus expected to hurt demand for iPhone

Goldman Sachs downgraded Apple Inc. stock to sell on Friday and cut its price target to $233 from $250, as it reduced its earnings estimates for a third time since Feb. 17.

Analysts led by Rod Hall said…

they are modeling a far deeper reduction in unit demand through mid 2020 followed by a shallower recovery heading into 2021.

“We also assume some lingering ASP (average selling price) weakness as consumers look to economize similar to what we have seen in prior downturns,” they wrote in a note to clients.

“In addition to this we believe that Services growth slows substantially in 2021 and that Services as a percentage of revenue actually stagnates in that year.”

Goldman is expecting a 36% decline in iPhone unit demand in the second quarter and a 24% decline in the first half of calendar 2020.

Analysts are expecting the company’s other products to experience a similar trajectory.

“There are multiple examples of ASPs dropping in the midst of a recession and then remaining weak well beyond the point when units recover,” said the note.

Price weakness could affect…

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