Goldman cuts Apple profit estimates after roll out of new phones

  • Goldman Sachs reiterates its neutral rating for Apple shares and cut its fiscal 2019 profit estimate for the company.
  • "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 and earnings estimates, offset slightly by a higher unit forecast," analyst Rod Hall says.
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Goldman Sachs is reducing its earnings forecast for Apple due to the smartphone maker's new lineup of iPhones.

The firm lowered its fiscal 2019 earnings per share estimate to $13.77 from $14.53 and reiterated its neutral rating for the company's stock.

"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 said in a note to clients Wednesday.

Apple shares closed up 2.4 percent Thursday.

Hall reaffirmed his $240 12-month price target for Apple shares, representing 9 percent upside to Wednesday's close.

Apple on Wednesday announced its new iPhone XR and priced the entry-level version of the phone at $749 versus the $849 Goldman previously estimated. The company also eliminated the iPhone 6S and SE lower-priced models from its lineup.

"We also assume higher ASPs for the small volumes we had previously been expecting for the SE and 6s," he said. "However, the reduction in pricing expectation for the high volume iPhone XR in our model more than offsets these positive mix changes."

Apple shares are significantly outperforming the market this year. Its stock is up 31 percent year to date through Wednesday versus the S&P 500's 8 percent gain.

Last month, Apple became the first publicly traded U.S. company to reach $1 trillion in market value.

— CNBC's Michael Bloom contributed to this story.

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