In an investors note released Friday morning, UBS analyst Steven Milunovich announced that he expects Apple (AAPL) iPhone and iPad sales to drop next year, as he cut sales estimates for the March, June and September 2013 quarters by 5 million units for the iPhone and 2 million for the iPad. Despite this decline in estimates, UBS still maintains its “buy” rating for Apple Inc (NASDAQ: AAPL). stock though it has adjusted its target price to $700 from $780, falling below Wall Street’s consensus forecast of $754.02 as compiled by Thomson Reuters. This new valuation is a +32.2% projected increase in value from Thursday’s closing price of $529.69.
Shares remained down $10.49, or -1.93%, in premarket trading on Friday and are up +30.79% year-to-date.
Earlier this week, Jefferies analyst Peter Misek also cut his target price for the stock to $800 from $900 citing market saturation for apple products as a chief concern. He also mentioned concern about investment in next-generation technology and more expensive semiconductor transitions that might hurt Apple’s ability to leverage a price margin in the future.
Milunovich also cited several reasons for the decline in projected sales to include competition from the lower-priced iPad Mini and other smartphone makers, such as Samsung’s Galaxy S and other Android platform devices, lowered projected sales of the iPhone 5 for the Chinese market and a lackluster European market.
Milunovich projections for the performance of Apple Inc. aren’t all negative, however, as he predicts some positive events may still lie ahead and expects Apple to continue to innovate. “We expect that China Mobile may start to sell iPhones in the Dec quarter, so a summer 5S with TD-SCDMA and fingerprint recognition is possible,” Milunovich said. “Apple is driven to make beautiful products. Whether it is an iTV, wearable computers, or another new product category, we have faith that innovation is not dead.”
Other factors that spell future trouble for Apple could are on the horizon as the drop in price may also be related to yesterday’s ruling by a Delaware jury that found Apple to be infringing upon three patents held by a shell company that partly belongs to Sony Corp. of American and Nokia Corp.
Though damages have yet to be determined, this news does not bode well for Apple’s continuing patent war with Samsung or hopes that the company will continue to be innovative, as it may have misappropriated technology related to camera phone technology, call rejection and call handling.
Though MobileMedia announced that it would gladly license its patents related to smartphones, mobile phones and other portable devices to the Cupertino based company in 2010, a ruling that declares that three charges of out of 11 total purported infringements hold weight means there will be a larger production cost no matter how the ruling is settled.
Apple’s stock has taken a beating over the last few months. Falling from the $700 mark it reached in mid-September almost 200 points, it opened for trading this morning at a price of roughly $514.