Apple analysts keep warning of slowing iPhone sales

(THE WALL STREET JOURNAL) Appleshares have been looking rosier in recent weeks. But another analyst is getting slightly less optimistic amid ongoing concerns about declining iPhone sales.

The tech giant’s stock recently traded down 1% to $101.94 after Pacific Crest Securities analyst Andy Hargreaves Sunday lowered his 12-month price target to $127 from $132. Soft demand for the iPhone is the reason Mr. Hargreaves said he made the move, though he continues to have an “overweight” rating on shares.

Many analysts are predicting that iPhone sales will decline for the first time ever this fiscal year, andthe consensus on Wall Street is that the dropwill start in the current quarter. Mr. Hargreaves is among those expecting a decline in sales. In fact, his forecast isbelow consensus estimates.

For the current period, Mr. Hargreaves cut his revenue estimate to $50 billion from $51.3 billion—the low end of Apple’s guidance and below Street consensus of $52.3 billion. He also trimmed his iPhone unit forecast for the quarter. He’s now expecting 47.5 million units to besold, versus his earlier estimate of 49 million. Apple analysts surveyed by FactSet project 50 million units were sold in the current quarter (which is Apple’s fiscal second quarter).

“While not much appears to have changed since mid-January, our demand and supply checks seem more consistent with sales volume at the low end of Apple’s guided range,” said Mr. Hargreaves.

In Apple’s latest earnings call at the end of January, chief executiveTim Cooksaid he anticipated iPhone units sold would decline in the current period because of tough comparables from the year-ago quarter. He said some of the company’s first-quarter demand last year was pushed into its second quarter due to supply constrains and that the macroeconomic backdrop is different now than it was a year ago—also adversely affecting sales.

The iPhone is the company’s flagship product, with it accounting for 68% of Apple’s revenue in thefiscal first quarter. While analysts largely are cautious on Apple’s sales this year, Mr. Hargreaves thinks the iPhone 7 will breathe new life into the company—a reason he’s sticking with his bullish rating on the stock.

“We continue to recommend owning [Apple]as we believe the combination of an attractive valuation, high customer stickiness and the likelihood for strong growth in the iPhone 7 cycle make [Apple]attractive at current levels.”

Apple’s stock hasrallied since the middle of February, along with an improvement in the broad market, as the company is expected to unveil new products in two weeks and as the tech giant pursuesa legal battle with the U.S. government over an iPhone used as evidence in the San Bernardino, Calif., shooting investigation.

The tech company lost a relatively minor legal fight Monday when the Supreme Court turned away Apple’s appeal in an e-books antitrust case.