‘setteB.IT’: UBS cuts estimate and lowers target on Apple
Posted by Dennis Sellers 
Oct 6, 2008 at 1:41pm
By Fabio M. Zambelli
Today UBS cut its estimate on Apple. Analyst Maynard Um wrote: “We are cutting targets and estimates on AAPL, HP, and Dell on PC demand and enterprise IT spending concerns.
“Our target for Apple (Buy) adjusts to $125 (was $195), HP (Neutral) to $48 (was $50), and Dell (Neutral) to $17 (was $20). We are cutting estimates on Apple and reducing our price target to reflect increased concerns over consumer spending over the next few quarters. Although we had believed that the higher-end consumer market would be somewhat insulated from the broader economic slowdown taking place, in light of our UBS economists’ GDP forecast reductions and our checks indicating that the high-end of the market is being impacted more than we had originally anticipated, we are taking down our Mac unit growth assumptions for FY09 while also reducing Mac margins and ASPs slightly to account for new product introductions and mix shift.
“Despite Apple’ solid growth prospects we do not believe investors will be willing to give Apple the high valuation multiple it has historically received. However, our Buy rating on Apple is based on expectations for two upcoming solid cash flow quarters helped by iPhone sales which should help boost the company’s cash position and new Macs which should help support continued market share gains. Although we expect these near term catalyst to help support shares over the next couple of quarters, we believe the main risk to the story remains gross margins (we are modestly revising our gross margin estimates down), which could experience downward pressure with new products and an increasingly competitive environment. However, component pricing continues to be favourable, which should help margins.”
You can read more here. (setteB.IT is an Italian language web site for Mac users and one of Macsimum News’ partners.)
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Dennis Sellers
Dennis has been a newspaper editor/reporter (seven years) and teacher (seven years). He has over 4,000 magazine, newspaper and online articles to his credit. He has also covered the Mac and tech industries for over a decade for such online publications as MacCentral, MacMinute and now MacsimumNews.
