Goldman Cuts Apple Estimates After New Device Launch

Goldman Sachs is not impressed with Apple’s new line of smartphones that were unveiled on Wednesday (Sept. 12), cutting its earnings estimates for the Cupertino, California iPhone maker as a result.

According to a report in CNBC, citing a Goldman Sachs research report to clients, it now expects the fiscal 2019 full-year earnings per share to come in at $13.77, down from its past target of $14.53 a share. The firm also reiterated its neutral rating on shares of Apple.

“Apple rolled out new iPhones as expected, but the new LCD ‘XR’ model was priced lower than we had thought likely. This effectively obsoletes two iPhone 8/8+ SKUs in our opinion, and drives us to reduce our ASP [average selling price] and earnings estimates, offset slightly by a higher unit forecast,” Analyst Rod Hall wrote in the research report covered by CNBC. The analyst still has a $240 price target on the stock, implying that shares can gain an additional 9 percent based on the Sept. 12 closing price.

On Wednesday (Sept. 12) Apple put all the rumors and speculation to bed by launching three new iPhones and a new version of the Apple Watch. The smaller of the new top-line models, the XS comes with a 5.8-inch Super Retina OLED display; XS Max bumps the screen up to 6.5 inches. Both models are more waterproof, boast an upgraded A12 bionic chip and feature a major camera upgrade with the new Smart HDR sensor. The phones also have an increased battery life — 30 minutes longer — and the ability to support dual SIM, meaning users can set up primary and secondary numbers and know specifically which of the two is being contacted.

The XS will start at $999; the XS Max will start at $1,099. The third iPhone model, which some had thought would be called the iPhone 9 but was instead branded the XR, is a slightly less advanced version of the iPhone X, coming with a slightly thicker bezel, 6.1-inch LCD (as opposed to OLED) screen and without 3D touch. It will, however, have Face ID and will not have a home button. It also comes in a wider array of colors and has a much lower starting price tag (at $749) than the XS.

The new Apple Watch also continues the trend of offering the wearable as a health services device, with the new version wired to detect an unusually low heart rate and irregular rhythm symptomatic of atrial fibrillation. The Series 4 has also reportedly been approved by the FDA to measure a wearer’s EKG when the wearer holds his or her fingertips to the digital crown for 30 seconds.