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Apple investors brace for first decline in iPhone sales

Apple’s seemingly untouchable iPhone may fall this quarter

Apple Inc. AAPL, -0.57% is expected to report its first year-over-year decline in iPhone unit sales when it reports second-quarter earnings after the market close on Tuesday.

Several analysts have lowered iPhone estimates in recent weeks, citing weak outlooks from Apple suppliers such as Jabil Circuit Inc. JBL, -0.72% and Qualcomm Inc. QCOM, -0.40% and checks within Apple’s supply chain that indicate weak iPhone builds.

Analysts on average are expecting Apple to report iPhone unit sales of 50 million for its most recent quarter, which would mark a decline from 61 million in the year-earlier period.

Earlier this week, Raymond James analyst Tavis McCourt lowered his full-year outlook on iPhone sales to 212 million units on “meaningfully lower” average selling prices, which would mark the first time iPhone units have declined on the year. The consensus estimate is calling for iPhone unit sales of 217 million for fiscal 2016, versus 231 million last year.

Compounding these issues are signs people are upgrading their phones less frequently than they used to, a slowdown in demand in China, and expectations that the new iPhone 5SE and Apple Watch are selling below expectations.

Despite the concerns, however, the average rating on the stock among a poll of roughly 40 analysts surveyed by FactSet is the equivalent to buy. The median stock target among those analysts is $132.70.

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