Rosenblatt Suggests Apple iPhone 8 Preorders Are Weak; Users Holding Out For iPhone X?

Apple Inc. (NASDAQ: AAPL)'s stock lost nearly 3 percent Wednesday morning, partly due to a cautionary report from analysts at Rosenblatt Securities.

Based on initial research, it appears iPhone 8 preorders are "substantially lower" than prior iPhone 7 and iPhone 6 levels, analyst Jun Zhang commented in the report. While it may hold true that many would be customers are waiting for the high-end iPhone X model, the fact remains that current preorder levels "could bring some headwinds."

Within China there were approximately 1.5 million iPhone 8 preorders observed on JD.com in the first three days, which is notably short of the 3.5 million iPhone 7 orders that were observed in its first three days, the analyst said. On top of that, China Mobile's iPhone 8 preorders totaled around 1 million units compared to 2.5 million units for the iPhone 7 and 3.5 million units for the iPhone 6.

In the U.S., initial feedback similarly suggests iPhone 8 preorder volume is below both the iPhone 7 and iPhone 6.

Based on concerning initial feedback, Zhang said Apple may need to cut its iPhone production plan of around 70 million iPhone 8 and 8 Plus units for the bottom half of 2017. There are some concerns that the iPhone X production ramp won't be able to meet demand in both the December and March quarters.

Zhang maintains a Neutral rating on Apple's stock with an unchanged $150 price target, which implies downside from Wednesday's opening price of $157.90.

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