Apple shares fell and hits 7-week low after Barclays downgrade due to low demand. Apple’s shares rose nearly 50% in 2023, hitting a record high in mid-December in a year when Big Tech led the markets. Apple has been grappling with low sales as with demand slowdown since early last year and has forecast holiday-quarter sales below Wall Street estimates.
Apple Inc. got itself a new bear, this was as expectations of soft demand for its latest iPhone prompted analysts at Barclays to downgrade the stock. Apple shares fell 3.6% on Tuesday, their biggest one-day percentage drop since September, and the decline erased more than $107 billion in market value.
Apple low sales
On Tuesday Apple’s shares fell nearly 3.6% to a seven-week low after Barclays downgraded the shares of the world’s most valuable company on concerns that demand for its devices from the iPhone to the Mac will remain weak in 2024.
Barclays is the second brokerage to have the equivalent of a “sell” rating on the Apple stock, which now has its most number of bearish recommendations in at least two years, according to LSEG data.
The Apple stock accounts for a hefty 7% of the S&P 500’s market weight. The broader index was dragged 0.56 per cent lower on Tuesday. Apple rose nearly 50% in 2023, hitting a record high in mid-December in a year when Big Tech led the markets.
Slower demand and competition
Apple has been grappling with a demand slowdown since early last year and has forecast holiday-quarter sales below Wall Street estimates. Its performance in China has also been a worry after the revival of local rival Huawei.
“The iPhone 15 has been lacklustre and we believe iPhone 16 should be the same,” Barclays analyst Tim Long said in a client note, pointing to the China weakness as well as subdued demand in developed markets.
Mounting risk for Apple’s services business
The brokerage also warned risks were mounting for Apple’s services business, which has come under the scanner in countries including the United States over app store practices.
The business has often outpaced growth in Apple’s hardware segment in recent years and now accounts for nearly a quarter of the company’s total revenue.
The U.S. International Trade Commission ruled earlier this year that the Apple Watch violates two Masimo patents related to blood-oxygen sensing and imposed an import ban on the Ultra 2 and Series 9 models.
Barclays downgraded
The stock rout on Tuesday erased more than US$100 billion of Apple’s market capitalization, as its shares fell and closed at US$185.64.
Barclays downgraded the stock to “underweight” from “neutral” and trimmed its 12-month price target by US$1 to US$160. Before Tuesday, Itau BBA’s “sell” was the only bearish rating on Apple since July 2022.
Analysts, on average, rate the iPhone maker “buy”, with a median price target of US$200. The company trades at about 28.7 times its 12-month forward earnings estimates, much higher than the S&P 500’s 19.8.
