Analysts hold high hopes for Apple even as stock dives

By Noel Randewich

SAN FRANCISCO (Reuters) - Apple's stock slump of almost 20 percent over the past month has exposed a widening divide between investors and the sell-side analysts who cover the iPhone maker.

Brokerage analysts focused on the company's relatively modest price-to-earnings valuation are mostly sticking to projections that would have Apple surge 50 percent or more this year, even after trimming their own earnings forecasts in the face of worries about soft demand for the iPhone.

This week alone, reports of slowing shipments of the iPhone 6S and 6S Plus helped shave 7 percent off Apple's stock, pushing it below $100 for the first time since a deep global selloff last August.

The steep decline has added psychological pressure to analysts sticking to rosy outlooks for Apple.

"It's been a hurricane of bad news and once that clears Apple should start to move higher as the risk/reward is compelling. It's been a street fight and the bears are winning," said FBR analyst Dan Ives. He recently cut his price target to $150 from $175.

Hints from Asian suppliers that demand for the Iphone 6S and 6S Plus may be lighter than expected have prompted almost half of the analysts covering Apple to trim their earnings estimates since early December. Analysts now expect Apple to increase revenue this year by less than 4 percent on average.

That is a far cry from the 28 percent achieved in the fiscal year that ended in September, but just 1 percent lower than it was a month ago.

The stock closed down Thursday 4.2 percent at $96.45. Analysts' average 12-month target for Apple's stock has declined by less than $2 to $147.

The only analyst whose price target is anywhere near Apple's current price is Rosenblatt Securities' Jun Zhang, who this week cut his estimate to $102 from $140 and downgraded the stock to "neutral" from "buy".

No analyst tracked by Thomson Reuters recommends selling Apple now.

On Thursday, RBC's Amit Daryanani became the latest analyst to cut his estimates for the March and June quarters. He maintained his "outperform" rating and, based on a valuation of 14 times his expected 12-month earnings, Daryanani trimmed his target price to $130 from $140.

His argument for buying Apple is similar to others who point to Apple's current valuation of 10 times expected earnings.

Wall Street analysts are often slow to update their official estimates and price targets. Some of the over 20 analysts who have not officially updated their estimates in the past month may in the future.

(Reporting by Noel Randewich; editing by Linda Stern, Bernard Orr)