Concerns about the prospects for Apple grew Wednesday, as some analysts doubted whether increases in iPhone prices will be enough to counter anticipated declines in unit sales of the company's largest source of revenue.
The questions involving the iPhone led Guggenheim Partners analyst Robert Cihra to cut his rating on Apple's stock to neutral from buy and strip away his $245-a-share price target on Apple's stock. Cihra said that even though he expects the introduction of new iPhones, such as the iPhone XS Max, with its $1,099 starting price, to boost average iPhone selling prices by 3 percent next year, he anticipates overall iPhone revenue to decline by 2 percent on a year-over-year basis.
Cihra said that by putting more emphasis on higher-priced iPhones, Apple could be setting itself up for missing out on business in two of its key overseas markets.
"We see growing risk of even softer iPhone unit demand," Cihra said. "With downside in China, India and other emerging markets, where Apple may need to start considering lower price points."
Along with Cihra's downgrade of Apple's stock, UBS analyst Timothy Arcuri cut his price target on Apple's stock to $225 a share from $240, and took down his estimates for iPhone sales in Apple's current quarter to 73.5 million phones from 75 million.
Earlier this week, Apple shares fell 5 percent after Lumentum, a Milpitas-based company that makes face-recognition technology used in the iPhone, cut its sales forecast because one of its largest customers told Lumentum that it wanted to "materially reduce shipments" for laser diodes used in 3D-sensing applications.
While Lumentum didn't disclose its customer's name, many investors and analysts believe the company to be Apple, as it accounts for 30 percent of Lumentum's revenue. Apple did not respond to a request for comment about its relationship with Lumentum.
Apple also stoked speculation about its future iPhone sales when it said this month that it would no longer give quarterly unit sales figures for iPhones, iPads and Mac computers.
At that time, Apple reported fiscal fourth-quarter sales of $62.9 billion, with $37.19 billion of that revenue coming from 46.89 million iPhones sold.