Shares of Apple Inc. started 2024 with a selloff, after Barclays analyst Tim Long said it was “time for a breather,” citing weak hardware sales as iPhone 15 demand disappoints.
“We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounce-back in Macs, iPads and wearables,” Long wrote in a note to clients. “The biggest takeaway from the latest checks is incrementally worse [iPhone] 15 data points out of China, together with developed markets remaining soft.”
He cut his rating on the stock
AAPL,
to underweight from neutral, and trimmed his price target to $160 from $161. The new target implies 14.6% downside from current levels.
The stock slumped 3.6% on Tuesday to $185.64, for its lowest close since Nov. 13. It was also Apple’s biggest one-day decline since it dropped 2.9% on Sept. 7, 2023.
Long said iPhone 15 sales have been “lackluster” and believes Phone 16 sales will be the same, as he expects other hardware categories to remain weak. He said it’s time for investors to take a “breather” on the stock, as he doesn’t think it can keep rallying in the face of downbeat demand data, like it did in 2023.
“We expect reversion after a year when most quarters were missed and the stock outperformed,” Long wrote.
He expects Apple to report “in-line” fiscal first-quarter results, which runs through December, but he trimmed his second-quarter to further below consensus expectations.
He now expects earnings per share and revenue for the quarter through March to be down in the low-single-digit percentage range, while the FactSet consensus calls for EPS to be up 2.6% at $1.57 and revenue to rise 1.1% to $95.8 billion.
Apple’s stock surged 48.2% in 2023, or almost double the S&P 500 index’s
SPX
gain of 24.2%, even as revenue for each quarter of fiscal 2023 through September was below that of a year ago. The 2023 gain started with a 3.7% selloff on Jan. 3, 2023.
Long is now one of just four of the 44 analysts surveyed by FactSet who are bearish on Apple’s stock, while 27 (61%) are bullish and 13 are neutral. His $160 price target is 19.2% below the average target of $197.92.
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