Tim Cook

[credit provider=”Asa Mathat | All Things Digital”]

Apple’s stock is sinking again this morning.UBS analyst Steve Milunovich is cutting his price target to $700 from $780, and reducing his earnings estimates for the first three calendar quarters of next year. It’s still a buy, says Milunovich.

This is the second big bank to cut its Apple price target this week. Jefferies cut its price target to $800, down from $900 on Monday.

Milunovich is reducing his iPhone sales estimate for the March, June and September quarters by 5 million units. He’s lowering his EPS estimate by 10%, putting him 5% below consensus.

The reasons he’s getting conservative:

  • Supply chain sources suggest falling iPhone manufacturing for the March quarter.
  • Chinese sources tell him iPhone 5 sales won’t be as strong as the iPhone 4S.
  • The iPad Mini may be cannibalising big iPad sales, which means less in revenue.
  • The previous growth estimates seemed to aggressive in the face of the bad European economy and competition from Samsung.

He also delivers a backhanded compliment to Apple, saying, “Apple maturing but innovative… Apple is driven to make beautiful products … we have faith that innovation is not dead.”

The slight burn is calling it “maturing” and then the second burn is the fact that Apple needs UBS to defend its track record of innovation.

This is to be expected now that Steve Jobs is well-removed from the company. However, it’s not like some other company has come along and invented something that Apple should have invented. What are the great innovations that Apple has missed since Steve Jobs died? This notion that Apple is done innovating seems a touch over blown.