Apple Inc. Faces Selloff as Analyst Predicts Weak iPhone 15 Demand

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Shares of Apple Inc. (AAPL) have experienced a selloff at the start of 2024, following Barclays analyst Tim Long’s cautious prognosis. Long suggests it is time for a pause, attributing the decline to disappointing demand for the iPhone 15 and sluggish hardware sales.

Weakness in iPhone Volumes and Demand

According to Long, there are indications of weakness in iPhone volumes and mix, as well as a lack of recovery in Macs, iPads, and wearables. He highlights particularly concerning data points relating to iPhone 15 sales in China, and mentions that developed markets are showing a similar trend.

To reflect this sentiment, Long downgraded AAPL’s rating from neutral to underweight, alongside reducing the price target from $161 to $160. This revised target implies a potential 17% decline compared to the previous closing price of $192.53.

Stock Performance

As the news broke, Apple’s stock experienced a 1.8% slump during premarket trading on Tuesday. This drop suggests that the stock will open at a seven-week low.

Long claims that the subdued demand for iPhone 15 is likely to be replicated by iPhone 16 sales, as he anticipates continued weakness across other hardware categories. Considering this, he advises investors to take a break from the stock, emphasizing that it may struggle to sustain its rally in light of lackluster demand.

Outlook and Expectations

Long expects Apple’s fiscal first-quarter results, ending in December, to be in line with expectations. However, he predicts a downswing in earnings per share and revenue for the quarter through March, both at low-single-digit percentages. In contrast, the FactSet consensus anticipates a 2.6% increase in EPS to $1.57 and a 1.1% rise in revenue to $95.8 billion.

Market Performance and Analyst Perspective

Despite underwhelming revenue in all quarters of fiscal 2023 through September, Apple’s stock managed an impressive surge of 48.2% throughout the year. This nearly doubled the gains of the S&P 500 index.

Long’s bearish stance places him among the minority, as only four out of 44 analysts surveyed by FactSet express a similar sentiment toward Apple’s stock. Meanwhile, the majority (61%) remain bullish, and the average target price stands at $197.92 – 19.2% higher than Long’s cautious projection.

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