Apple Faces Market Challenges as Barclays Issues Downgrade
Apple experienced a 3.6% dip on Tuesday, hitting a seven-week low. This decline was instigated by Barclays decision to downgrade Apple’s shares, expressing concerns about sustained weak demand for the company’s diverse product range, spanning iPhones to Macs, throughout 2024.
Barclays Downgrade Signals Market Shift
Barclays now stands as the second brokerage firm to adopt a “sell” rating on Apple, marking a notable departure in sentiment compared to the past two years, according to data from LSEG. Given Apple’s substantial 7% contribution to the S&P 500’s market weight, the broader index witnessed a 0.56% decline on Tuesday.
Despite an impressive nearly 50% surge in 2023, peaking at a record high in mid-December, Apple has grappled with a demand slowdown since early last year. Adding to these challenges is the concerning performance of the company in China, where the resurgence of local competitor Huawei has posed a tangible threat.
Analyst Insights on iPhone and Market Dynamics
Barclays analyst Tim Long voiced reservations specifically about the iPhone 15, characterizing its performance as lackluster and foreseeing a similar fate for the upcoming iPhone 16. Long highlighted weaknesses in China and subdued demand in developed markets as contributing factors. It’s worth noting that Long boasts a four out of five stars rating for accuracy in providing recommendations on Apple, according to LSEG data.
Beyond concerns about device sales, Barclays raised alarms about the growing risks associated with Apple’s services business. This segment, consistently outpacing the growth of Apple’s hardware sector, now constitutes nearly a quarter of the company’s total revenue. Notably, it has recently come under scrutiny in various countries, including the United States, due to concerns over app store practices.
The stock downturn on Tuesday resulted in the erosion of over $100 billion in Apple’s market capitalization, concluding with the closure of its shares at $185.64. Barclays not only downgraded the stock from “neutral” to “underweight” but also marginally adjusted its 12-month price target to $160. Before this, the only bearish rating on Apple since July 2022 came from Itau BBA.
While the general analyst consensus leans toward a “buy” rating for Apple, with a median price target of $200, the company’s current trading multiple of approximately 28.7 times its 12-month forward earnings estimates significantly outpaces the S&P 500’s 19.8.
Read More (Apple – Tech Foom)
