One day ahead of Apple’s holiday earnings report, UBS analyst Steve Milunovich lowered his stock target for Apple shares from $700 down to $650.
The reason behind Milunovich’s lowered projection is a new survey from Consumer Intelligence Research Partners which found that consumers, by and large, are increasingly flocking towards cheaper iPhone models which yield lower gross margins for Apple.
Consequently, he adjusted his 2013 and 2014 earnings outlook for the company. For the fiscal 2013 year, he now anticipates earnings of $44.68 a share, down from an initial target of $47. And in 2014 he projects Apple to bring home earnings of $52.80 a share, down from an initial target of $55.85.
Milunovich still has a “Buy” rating on Apple’s shares, albeit with a lowered target of $650 per share.
Notably, the survey cited by Milunovich noted that demand for older iPhone models went up to 50% in the iPhone 5 cycle, compared to just 33% in the iPhone 4S cycle.