In a notable market development on Tuesday, Apple (AAPL.O) experienced a nearly 3.6% dip, marking a seven-week low.
This downturn came in the wake of Barclays downgrading the shares of the tech giant, citing apprehensions regarding the continued weakness in demand for Apple’s range of devices, spanning from iPhones to Macs, throughout the year 2024.
Barclays’ move places it as the second brokerage to assign a “sell” rating to Apple’s stock, contributing to the highest number of bearish recommendations the company has seen in at least two years, as per LSEG data.
Given that Apple constitutes a substantial 7% of the S&P 500’s market weight, the broader index experienced a 0.56% decline on Tuesday.
This is a significant shift from 2023, when Apple registered an impressive nearly 50% surge, reaching a record high in mid-December, with Big Tech leading the market trends.
The tech giant has been grappling with a demand slowdown since the early part of the preceding year and had already forecasted sales for the holiday quarter below the estimates put forth by Wall Street.
The performance of Apple in China is particularly worrisome, especially with the resurgence of local competitor Huawei.
Barclays analyst Tim Long expressed concern over the lackluster performance of the iPhone 15 and anticipated a similar trajectory for the iPhone 16.
He pointed to weaknesses in China and subdued demand in developed markets as contributing factors.
Long, who holds a four out of five stars rating for accuracy in his Apple recommendations according to LSEG data, also underscored rising risks for Apple’s services business.
This segment, often outpacing growth in the hardware sector, accounts for nearly a quarter of the company’s total revenue.
The scrutiny over app store practices in countries like the United States has further heightened concerns.
Tuesday’s stock rout led to a depletion of over $100 billion in Apple’s market capitalization, closing the shares at $185.64.
Barclays, in its downgrade, shifted the stock to “underweight” from “neutral” and slightly reduced its 12-month price target to $160.
Before this development, Itau BBA’s “sell” rating in July 2022 was the only bearish outlook on Apple.
Despite the recent downturn, analysts, on average, still maintain a “buy” rating for the iPhone maker, with a median price target of $200.
However, the company currently trades at about 28.7 times its 12-month forward earnings estimates, significantly higher than the S&P 500’s 19.8.
Source: theglobeandmail
