'It's a dark day for Apple,' says analyst Dan Ives

Key Points
  • Apple's lowering of its guidance for the first quarter is a "major black eye," analyst Dan Ives says.
  • "It's a dark day for Apple and bulls," he says.
  • He calls the degree of softness Apple is experiencing in China "a bit of a jaw-dropper."
Lower guidance is a 'major black eye' for Apple, says Wedbush's Dan Ives

Apple's lowering of its guidance for the first quarter is a "major black eye" for the tech giant, noted analyst Dan Ives told CNBC on Wednesday.

Apple lowered revenue guidance to $84 billion, down from the $89 billion to $93 billion it had previously projected. The company lowered gross margin to about 38 percent from between 38 and 38.5 percent.

"It's a dark day for Apple and bulls," said Ives, managing director of equity research at Wedbush Securities. He has been bullish on the stock, with a buy rating and $275 price target.

Apple CEO Tim Cook
Bernd Thissen | AFP | Getty Images

CEO Tim Cook told CNBC's Josh Lipton on Wednesday the shortfall is "100 percent from iPhone, and it's primarily in China."

"It's clear that the economy began to slow there for the second half, and what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy," Cook said.

Ives said the China demand story over the next few quarters will be the focus going forward for Apple.

"The degree of softness that we're seeing in China is a bit of a jaw-dropper," he said on "Closing Bell."

However, right now he views this as "the sum of the parts."

While he expects Wall Street analysts to bring their targets for the stock down in the near term, there are questions about what could happen in the future.

"It comes down to: Are they going to cut prices? Is this a two- or three-quarter massive downtick that we're seeing and then we start to see better pricing in terms of 2019? In that case, the installed base [total current users] and the iPhone story continues to be there," he said.

It all comes down to how Apple takes things from here.

"This, in my opinion, for Cook will be a defining period, how he and the company handle it specifically around metrics and China demand."