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Investing.com -- Apple faces significant uncertainty ahead of its fiscal third-quarter earnings, with MoffettNathanson warning that the coming report “will be unusually difficult to make sense of.”
The firm reiterated a Sell rating and a $139 price target on the stock, citing multiple unresolved issues ranging from tariffs and China discounting to AI strategy and potential fallout from regulatory rulings.
“In the U.S., it appears that our anticipation of a pull-forward of demand to beat potential price increases on Apple (NASDAQ:AAPL) products in response to tariffs has been borne out,” MoffettNathanson said, noting that iPhone unit volumes in April and May were up double digits year over year.
However, they note that revenue may not keep pace due to weaker average selling prices.
On China, the firm observed that while iPhone volumes spiked in May, average selling prices “appear to have been cut dramatically” as Apple discounted Pro models to align with local government subsidies, another move that may have front-loaded demand.
The firm also said investors face uncertainty around Apple’s Services revenue. “It will reflect a month and a half or so of impacts from the Epic Games ruling… Will those impacts show up in the numbers, or is it still too early to say?” MoffettNathanson asked.
Perhaps most pressing is Apple’s AI positioning, according to MoffettNathanson.
The firm said Apple is still seen as “rudderless in AI” and may consider “buying an answer” to its perceived shortcomings, further muddying the near-term outlook.
“With the asymmetry of the risks, we’d argue for lower estimates,” the firm wrote. “To date, the market has supplied little of either.”
MoffettNathanson warned that “greater uncertainty ought to mean lower multiples,” underscoring downside risk for the stock.