Apple stock drops again as concern mounts over iPhone sales

Apple Inc. stock fell Friday for the third day in a row after analysts at Morgan Stanley cut their forecasts for iPhone shipments, adding to concern about the tech giant’s primary source of revenue.

Morgan Stanley analyst Katy Huberty lowered her projections for iPhone shipments by 1 million for the quarter that ended in March and by 6 million for the current quarter. Huberty now expects shipments for fiscal 2018 to be 210 million, down from an earlier estimate of 217 million.

The note comes a day after Taiwan Semiconductor Manufacturing Co. predicted current-quarter sales about $1 billion less than analysts had projected. As Apple’s main chip supplier, TSMC’s tepid revenue forecast revived fears that the iPhone X, Apple’s flagship $999 handset, already may be losing momentum a quarter after its release.

TSMC confirmed weakness at the very high end of the smartphone market, according to Neil Campling of Mirabaud Securities Ltd. The world’s largest chip foundry company had 63 days of inventory in the first quarter. “We have tracked TSMC inventory days for every quarter over the last decade and inventory days have never been higher,” he wrote.

Apple shares fell 4.1% to $165.72 on Friday and were down more than 6% since Wednesday.

OTR Global LLC also weighed in on Apple, saying the outlook for iPhone sales in China has deteriorated for the second quarter of 2018 as competition from Asian vendors intensifies.

Still, it wasn’t all bad news for Apple. Morgan Stanley’s Huberty also said to buy any dip in shares after Apple announces its second-quarter results, scheduled for May 1, since the company probably will accelerate its capital return program.

And Apple has other levers to pull, Bank of America Merrill Lynch analyst Wamsi Mohan said in a note Friday. The company will pivot in coming years away from the “boom-bust of iPhone cycles” toward services, with products like the App store, iCloud, Apple Music, iBooks and Apple Pay offering “significant room to grow,” he wrote.

UPDATES:

1:15 p.m.: This article was updated with Apple shares’ closing price.

This article was originally published at 11:20 a.m.