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Apple downgraded by BMO, expects iPhone maker to slash revenue forecast this week

Key Points
  • Disappointing iPhone demand will force Apple to lower expectations, according to yet another Wall Street firm.
  • BMO Capital Markets lowers its rating for Apple shares to market perform from outperform.
  • Analyst Tim Long predicts weaker-than-expected sales for the company's March quarter.
Customers come to the newly opened Apple store on December 10, 2016 in Shanghai, China.
VCG | Getty Images

Disappointing iPhone demand will force Apple to lower expectations, according to yet another Wall Street firm.

BMO Capital Markets lowered its rating for Apple shares to market perform from outperform on Wednesday, predicting weaker-than-expected sales for the company's March quarter.

"There has been much in the press about order cuts for iPhone X, and we believe a weaker mix in Q1 will push estimates lower for March and beyond," analyst Tim Long wrote in a note to clients. "We expect a meaningful guide lower when the company reports on Thursday night, on the order of $5-6 billion compared to consensus revenue estimates."

Apple will report first-quarter financial results that day.

Long lowered his price target to $162 from $199 for Apple shares, representing 3 percent downside to Tuesday's close.

"We are more concerned by a secular change for iPhone. Following 10 years where [average selling prices] have generally moved higher, we believe prices will plateau as with the rest of the industry," he wrote. "We still view the iPhone base as growing, and the devices are on average getting older. However, without a compelling product cycle in September, we may see a slow upgrade cycle once again."

Apple shares are underperforming the market this month, down 1.3 percent through Tuesday versus the S&P 500's 5.6 percent gain.

Investors are growing concerned after multiple reports that Apple has cut production targets for the iPhone X by 50 percent for the March quarter.

Other Wall Street analysts downgraded the tech giant's shares earlier this month.

Longbow Research lowered its rating on Jan. 17 to neutral from buy, predicting the company will ship fewer iPhones than expected in fiscal 2018.

Atlantic Equities reduced its rating on Apple shares to neutral from overweight on Jan. 22. The firm also predicted weaker-than-expected sales for the company's March quarter.

Apple did not immediately respond to a request for comment. The company's shares are up 0.4 percent Wednesday.

— CNBC's Michael Bloom contributed to this story.

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