Yahoo Finance Apple faces second downgrade, shares hit eight-week low
Apple is grappling with a challenging start to the new year as concerns about iPhone sales lead to a second downgrade within just one week. Piper Sandler’s recent rating downgrade caused a substantial drop in Apple’s shares, hitting an eight-week low on Thursday.
Harsh Kumar from Piper Sandler & Co. has downgraded his rating on Apple from ‘overweight’ to ‘neutral.’ This decision is based on concerns about a sluggish macroeconomic environment in China, which is expected to negatively impact iPhone demand.
“We are concerned about handset inventories entering into 1H24 and also feel that growth rates have peaked for unit sales,” Kumar said in a note. “Growth rates have peaked for unit sales,” analysts added.
This downgrade resulted in a 1.4% decline in Apple shares, bringing them down to $181.6. The drop has led to a market value decline of nearly $170 billion in the opening week of 2024. Despite these setbacks,
Apple still retains its position as the world’s most valuable company, boasting a market capitalization exceeding $2.8 trillion. Although recent declines have brought it 8% below its all-time high closing price in mid-December, the company remains a formidable force, according to Reuters.
Adding to Apple’s challenges, Barclays downgraded the Cupertino-based firm from ‘neutral’ to ‘underweight’ on Tuesday. The company has been contending with a demand slowdown since early last year, projecting holiday-quarter sales below Wall Street estimates.
Despite an impressive performance in the previous year, with a 50% surge in shares and reaching a historic market value of $3 trillion, the recent downturn has given rise to growing skepticism.
Investors, who previously relied on the resilience of Apple’s flagship device in the face of economic challenges, are now facing uncertainties due to increased competition, especially from Huawei Technologies Co., and a Chinese government crackdown on foreign-made devices.
The market eagerly awaits Apple’s strategic response in the evolving competitive landscape and how the company plans to navigate challenges posed by global market dynamics.
“Apple has the world’s most valuable technology base with 1.2B+ users. While Apple is exposed to a weaker consumer and risks in China, the long-term outlook remains attractive given its technology leadership, sticky user base, and path to spend per user upside,” noted Erik Woodring, Equity Analyst at Morgan Stanley.
“Catalysts include 1) a stronger iPhone 15 cycle, 2) re-accelerating Services growth, 3) underappreciated GM tailwinds, 4) new product launches, and 5) a potential hardware subscription. Longer-term investments in AR/VR, payments, health, autos and home can help sustain growth, and we believe Apple is well-positioned as a gen-AI enabler at the edge, given its stance on privacy, its large installed base, and in-house silicon development.”
Zacks Investment Research has outlined compelling factors for both selling and buying Apple stock. On the downside, significant challenges include intense competition in the smartphone and PC markets, macroeconomic hurdles, and mounting regulatory complexities.
However, on the positive side, Zacks emphasizes Apple’s advantageous position, citing the company’s momentum in the Services sector, widespread adoption of Apple Pay, and the flourishing Wearables business as key factors contributing to its appeal for potential investors.
