Barclays downgraded Apple’s stock, citing concerns over weakened iPhone sales volumes, particularly in China, leading to a decline in the company’s market cap by over $100 billion.
The brokerage shifted Apple from an “equal weight” to an “underweight” rating, highlighting lackluster iPhone 15 sales. The stock’s price target was adjusted to $160 from $161.
Impact on Apple stock and fiscal performance
The downgrade significantly impacted Apple’s stock, with shares falling by almost 3.6 percent on Tuesday, resulting in a market cap loss of over $100 billion.
Apple reported lower net sales for all devices in the 2023 fiscal year, including a dip in iPhone net sales to $200.58 billion.
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Barclays’s rationale and expectations for iPhone 16
Barclays attributed the downgrade to softening demand for the latest iPhone, emphasizing the device’s few new features as a deterrent for consumer purchases.
While the iPhone 16 is anticipated to launch later in the year with new features, Barclays remains skeptical about its positive impact on revenues, expecting a reversion after a year of weak results.
Barclays’ ‘underweight’ rating and legal scrutiny pose challenges for Apple”
Despite analysts giving Apple a “buy” rating on average, with a median price target of $200, Barclays’s “underweight” classification stands out, contributing to five “sell” or equivalent ratings compared to 34 “buy” and 14 “hold” ratings.
The legal scrutiny over Apple’s app store practices poses a potential risk to the services business, with an ongoing antitrust trial examining Google’s payment to Apple.
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China’s influence on Apple’s future and stock performance
China, accounting for about 20 percent of Apple’s global sales, is critical to the company’s future.
Reports of a potential ban on foreign phones for government employees in China could pose challenges for Apple.
While Apple’s stock saw nearly 50 percent growth in 2023, it lagged behind tech peers like Meta and Nvidia.
Apple’s upcoming product launch likely to impact valuation
Apple anticipates the launch of its Vision Pro mixed-reality headset this year, which could affect the company’s valuation.
Challenges with Apple Watch, including a recent ban over patent infringement claims, add to the complexities.
ITC ban on Apple Watches sparks $3 trillion market cap concerns
The ITC ban on certain Apple Watches was enacted, but Apple secured a temporary hold from a federal appeals court.
Amidst these challenges, Apple’s $3 trillion market capitalization could face scrutiny, making the success of upcoming products crucial for the company’s future.
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