Baird Analyst Cuts Apple Shares Estimates to Neutral

Apple is under a lot of scrutiny from markets and investors fearing earnings will fall shorter than expected as demand for the company’s iDevices seems to be in a slump. Forbes published today a Baird analyst’s rating update, as William Power decided to cut his Apple shares estimates to neutral over fears that Wall Street’s estimates are too high for what the company is able to deliver.

There is a lot of uncertainty for the March quarter, as rumors about Apple’s upcoming products and slow-performing current sales are adding to investors’ anxiety. The news that Apple will release this summer two new iPhones and most likely in October a new 4th generation iPad and a 2nd generation iPad Mini is concerning, as investors fear consumers will not welcome the new products with just enough enthusiasm to boost revenues over estimates.

Baird analyst William Power took into account reports, predictions and expectations and has decided to cut his rating of Apple shares to neutral from outperform. Power estimates the Apple stock will drop to $465 from $570 and has firm concerns the June quarter is going to be problematic.

“We are increasingly wary of several near-term risks, particularly consensus estimates that we believe remain frustratingly too high” reads William Power’s research note to investors. “With estimates likely to fall further and gross margin concerns likely to linger, we believe the shares could drop further, despite the sharp sell-off and valuation” the analyst adds. “Notably, we remain positive on Apple’s leading product portfolio, unmatched ecosystem and potential new products, and would look for a more significant reboot of estimates to potentially get more aggressive again” he says.

The intensely rumored cheaper iPhone might not have the effect most imagine. Cheaper will give Apple a better grip of the budget smartphone market, but at the same time it will deeply impact margins for the quarter. Add that to the impact iPad Mini’s cheaper price has had over Q1 and Q2 and as an investor you’ll have enough reasons to keep a close eye on Apple’s stock evolution.