Jeffrey chopped his FY 2013 profit forecast to $45.54 a share, from $51.68; for FY 2014, he goes to $49.69, from $55.58, and for FY 2015, he now sees $48.99, down from $54.90. (To be clear, that implies a down profit year in 2015.)
"We are more cautious than sell-side forecasts for revenue and gross margin, mostly driven by our expectation that iPhone gross margins and ASPs are unsustainably high," he writes. "Our scenario analysis shows that if iPhone gross margins fall from a recent high of 55% (estimated) to 45%, EPS for FY14E and FY15E will likely peak at $46 to $48, with $4-5 downside if margins fall to 40% – the historic peak for mobile phone vendors."
The analyst adds that near-term potential catalysts for the stock are thin.
"Launch of iPhone 5S or iPad mini with Retina display could be positive but seems unlikely to materially boost demand," he writes. "iOS7 launch may prove more critical (likely due in June), but recent management changes may limit extent of enhancements."
He adds that downside risk is likely limited by the stock's low P/E and the potential for a dividend increase, among other factors. He says most positive catalysts - new iPhones and an iOS refresh, for instance - are not likely until the second half. And he adds that the impact of the introduction of a low-end iPhone "could reinforce gross margin concerns."
Apple this morning is down $6.15, or 1.2%, to $495.60.
Apple shares last closed below $500 in February 2012.
