Apple dips after reportedly telling suppliers to cut iPhone X production targets in the first 3 months of the year
- Apple's stock slid on Monday morning on news that it plans to reduce its production targets for the iPhone X in the first three months of the year.
- A UBS analyst believes that the production slowdown will not halt the company's earnings growth due to the success of its other product lines and windfalls from the tax reform law.
- Apple expects to release its first-quarter 2018 earnings on Thursday, Feb. 1.
- View Apple's stock price in real time here.
Shares of Apple slipped after reports that the company informed its suppliers to halve their production targets for the iPhone X in the first three months of the year, according to the Japanese publisher Nikkei.
Apple's stock was down 2.54% at $167.16 a share on Monday morning.
The tech behemoth decided to cut its iPhone X production target to 20 million units from 40 million units on the heels of a slower-than-expected holiday sales season, Nikkei reported.
Rumors that Apple has cut iPhone X orders from its factories in China were reported last week.
China is an important market for the Silicon Valley company and has been seen as one of the main drivers for future growth. Yet Chinese demand for Apple's latest iPhones has been tepid, leading a KGI securities analyst to write that Chinese consumers are steering clear of the latest iPhones because they are skeptical of the iPhone X's screen size due to a notch on the phone that makes it appear smaller.
"We don't think F18 will be a 'supercycle' year given unit growth of about 10% dependent on China," UBS Analyst Steven Milunovich wrote in a note.
Despite that, Milunovich raised the price target on the company to $190 per share, citing higher iPhone revenue growth due to higher prices, solid performance in other product lines, a lower tax rate, and increased stock buybacks, which "keep us positive on the stock."
Apple is scheduled to report first-quarter earnings for 2018 on Thursday, Feb. 1. Milunovich expects Apple to report an earnings beat, but deliver a "moderately disappointing" March forecast.
Apple's stock was down 2.25% for the year.
