Apple (AAPL 1.41%) is headed for a nasty fall.
So says Goldman Sachs analyst Rod Hall. On Monday, Hall reiterated his sell rating on Apple's stock and slashed his price forecast from $80 to $75. His new estimate represents a potential decline of more than 36% from Apple's current price near $118.
Hall increased his fiscal 2021 earnings-per-share estimate for Apple by 4% after its fourth-quarter financial release. However, he reduced the price-to-earnings ratio at which he believes the tech giant's shares will trade by more than 8%, due in part to lower projected-revenue growth.
After listening to Apple's earnings call, Hall expects just single-digit growth for iPhone sales in the first quarter. "Apple's commentary points toward the weaker 5G iPhone cycle we have been forecasting rather than the 'Super Cycle' expected by consensus," Hall said.
Should you sell Apple's stock?
Hall is one of the biggest Apple bears on Wall Street. His $75 target price is 39% below the average analyst forecast of $123. Said differently, the consensus estimate calls for Apple's stock to rise by roughly 4%.
Moreover, while disappointing iPhone sales would no doubt put pressure on Apple's share price, Hall appears to be discounting strong sales of Macs and iPads during the coronavirus pandemic, as well as Apple's booming services business -- all of which could help to support the company's profit growth.
Perhaps most importantly, Hall seems to be putting a lot of weight on management's comments during a single conference call. Investors would likely be better served by focusing on the intriguing potential of ultra-fast, fifth-generation networks, which promise to boost interest in Apple's new iPhone models in the coming years. So even if iPhone sales come in below expectations in the first quarter, the longer-term view is far brighter.
Thus, investors shouldn't rush to sell their Apple shares anytime soon.