Apple Earnings Estimates Keep Falling. The Debate Is Whether to Buy the Stock.

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The Debate Is Whether to Buy the Stock. Apple Earnings Estimates Keep Falling. The Debate Is Whether to Buy the Stock. Apple Earnings Estimates Keep Falling. The Debate Is Whether to Buy the Stock.

Apple stock has fallen about 27% since peaking at $327.20 on Feb. 12.

Apple Earnings Estimates Keep Falling. The Debate Is Whether to Buy the Stock.

The stock has fallen about 27% since peaking at $327.20 on Feb. 12.

https://www.barrons.com/articles/the-coronavirus-may-delay-apple-iphone-launches-51583948340 https://www.barrons.com/articles/u-s-covid-19-cases-top-200-000-here-are-the-latest-numbers-51585830490 mailto:eric.savitz@barrons.com Apple Earnings Estimates Keep Falling. The Debate Is Whether to Buy the Stock. By Eric J. Savitz Photograph by Maja Hitij/Getty Images

Wall Street analysts continue to ratchet down their financial forecasts and target prices for Apple as they grapple with questions about the timing and strength of an eventual rebound in demand on the other side of the coronavirus pandemic.

There is clarity that fundamentals haven’t reached bottom, but considerable debate on whether to buy the stock.

Apple shares (ticker: AAPL) have fallen about 27% since peaking at $327.20 on Feb. 12. On Friday, the shares were down 2.1%, to $239.73. The S&P 500 was off 2.5%.

Morgan Stanley’s Katy Huberty is in the bullish camp. She repeated her Overweight rating on the stock Friday, while trimming her target price to $298, from $328, and cutting estimates for the third time this year.

Huberty now expects revenue of $250.9 billion for the September 2020 fiscal year revenue of $250.9 billion, down from $268.7 billion. For fiscal 2021, her financial model now calls for $295.4 billion in revenue, down from $328.2 billion.

Her estimates of earnings per share declined to $11.79 for this year, from $12.75, and to $15, from $16.98, for next year.

“While there is always risk that earnings could surprise negatively if social distancing measures last longer or consumer balance sheets deteriorate more, we believe Apple is best positioned to recover to its prior long-term revenue and earnings trajectory in light of industry leading customer retention rates and a strong balance sheet that enables outsized investment relative to peers, even in a prolonged downturn,” she writes.

Huberty says she thinks Apple will continue to buy back $20 billion of shares quarterly, while continuing to pay out about $14 billion a year in dividends.

Credit Suisse analyst Matthew Cabral also cut his target on the stock Friday, lowering it to $260, from $290, but took a more cautious stance on the shares than Huberty, maintaining a Neutral rating.

Cabral says he can appreciate the flight-to-quality argument for Apple shares, given the company’s fortresslike balance sheet. However, Cabral contends that the stock is still not cheap, at 17 times his newly reduced earnings forecast for calendar 2021, given that iPhones are a discretionary purchase at risk of being postponed if consumer spending weakens.

Cabral now expects profits of $12.41 a share for fiscal 2020, down from $13.71. For fiscal 2021, he now anticipates $13.99 a share, down from $15.53.

Write to Eric J. Savitz at eric.savitz@barrons.com

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.