Reflecting an indication of a potentially lower growth rate from the smartphone industry, investment bank Goldman Sachs cut its price target on Apple on Thursday.

Earlier, the bank had also reduced its forecast for the global smartphone unit growth. Goldman Sachs reduced the growth rate to 4 percent from 7 percent for next year and 5 percent from 6 percent for 2016.

Maintaining a “buy” rating, the bank has trimmed its price target to $124 from $136. On Thursday evening, the technology giant’s stock finished at $98.46. From 212 million for the whole of 2016, the predicted iPhone unit sale was trimmed to 211 million by Goldman.

“We also fine-tune our iPhone forecasts by introducing a detailed regional build, updating our installed base model, and adding an inventory overlay. Even with these assumptions, which we view as conservative, our model implies upside to consensus estimates, and we maintain our ‘buy’ rating,” the investment bank said in a research note.

In addition to lower average selling prices on a greater shift from developed to emerging markets, the reductions were driven by lower market growth, the bank further said. Relative to the higher-priced iPhone 7, more sales would be driven by the new lower-priced iPhone SE, expects the bank.

The consensus on full year 2017 sales is too low as pent up demand will likely coincide with iPhone 7 upgrades, said Goldman noting a brighter note for Apple. While risks such as product cycle execution, competition, foreign exchange fluctuations and the pace of innovation will drive the market down for Apple Inc., the bank points to the demand environment in China as being the most significant of the risks.

“We continue to view consensus estimates for (full year 2017) as too low, as we expect an increase in upgrades with the iPhone 7 based on the pent-up demand evident in our recent U.S. consumer survey, combined with our estimate of 26 percent year-on-year growth in the iPhone installed base as of September 2016”, the bank noted.

After it reported weaker-than-expected earnings in April, Apple has had a tough year. A drop of 16 percent year-on-year was highlighted by the company. The 26 percent fall in revenues from China, a country that was once a key driver of growth, was even more troubling for Apple. However by reporting 51.19 million for the quarter, the company beat Wall Street’s estimates on iPhone shipments. according to StreetAccount, analysts had expected 50.3 million.

“It is going to move into the cash cow territory. Where is the new blockbuster? It is very hard to see. Apple TV, watches? A different kind of growth profile and nowhere near what you had before,” Peter Toogood, investment director at City Financial Investment Company, told CNBC on Thursday.

With a fall of more than 8 percent in value of its shares since Apple announced the results for 2015-16, the company saw $46 billion in market cap being erased from its value. The company’s shares are over 6 percent lower in the last twelve months and are down over 5 percent year-to-date.

(Adapted from Bloomberg)

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