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Apple (AAPL) is having a still happy year as the company’s stock suffered its third downgrade in less than two weeks on Wednesday. The most recent attack comes from Redburn Atlantic’s James Cordwell, who downgraded the stock to unbiased while maintaining its target value of $200, raising fears of a slowdown in iPhone sales and the threat of regulatory hurdles.
Barclays and Piper Sandler also issued downgrades on Apple’s stock, last week, with Barclays’ Tim Long rerating the stock from Equal Weight to Underweight and lowering its price target from $161 to $160. Piper Sandler’s Harsh Kumar, meanwhile, downgraded Apple’s stock to Neutral.
Shares of the tech giant fell about 4% in the first days of 2024 on Wednesday afternoon. Shares of Apple’s Big Tech peers, including Microsoft (MSFT), Google (GOOG, GOOGL) and Meta (META), on the other hand, are up 1. 9%, 2. 2% and 4. 0%. 9%, respectively.
Overall, Redburn Atlantic, Barclays and Piper Sandler point to potential weakness in the iPhone and Apple’s segment. Barclays’ Long and Piper Sandler’s Kumar point to China as a top concern, with Long saying Barclays’ most recent checks show increasingly poor knowledge of the iPhone 15 in the region, with Kumar mentioning China’s deteriorating macroeconomic environment.
Greater China is Apple’s third-largest source of revenue in North America and Europe. In 2023, the area accounted for $72. 6 billion of the company’s $383. 3 billion total profit.
According to Long, while Apple is expected to report earnings for the December quarter in line with market expectations, the company will report earnings for the month of March based on the market consensus.
Kumar, for his part, says the negative news surrounding the ongoing controversy over Apple Watch patents and antitrust battles may prove problematic for Apple in the future.
But Wall Street isn’t entirely at odds with the iPhone maker. Of the 53 analysts who adhere to Apple, 32 rate buy, while 16 maintain ratings. Only five analysts have sell ratings for the stock.
Evercore ISI’s Amit Daryanani reiterated his outperformance score on Apple with a price target of $220, saying it might be time to buy the company’s percentage price drop.
And while he admits that Apple Watch bans are problematic and that Apple’s multibillion-dollar deal to make Google the default search engine in Safari may be in jeopardy, there are more positives than negatives to Apple’s story.
“As some fears subside and we move toward more positive data (Vision Pro), [Apple] would possibly start thinking again in a more positive way,” Daryanani wrote.
Morgan Stanley’s Erik Woodring says Apple’s 2024 deadline may be offering a big boost to the company.
“Not only are we with the basics on the road to recovery (albeit with some short-term inequality), but more importantly, 2024 will be the year in which Apple’s ‘Edge AI’ opportunity is likely to become a reality,” he highlighted through an LLM. Siri 2. 0 and a larger Gen AI-enabled operating formula (unveiled at WWDC in June) that have the potential to catalyze a cycle iPhone upgrade,” he wrote in a note to investors.
Apple hasn’t particularly announced a generative AI offering, instead focusing on learning the device with the accuracy of its autocomplete feature. But the company is reportedly working hard to incorporate this generation into its products in the long run.
Apple may also take advantage of the expected resurgence in PC and desktop sales, as consumers who bought computers at the start of the pandemic begin to look for newer, faster systems.
All of this comes as Apple prepares to launch its $3,499 Vision Pro spatial computing headset in February. Preorders for the device start Jan. 19. Apple’s first new product category in nearly a decade, the Vision Pro is expected to get off to a slow sales start as a result of its relatively high price.
And depending on how the Vision Pro launch goes, Apple may spark a lot of interest in the headset among consumers and business users. No, most people may not be able to buy Vision Pro, but even generating buzz around the product can simply gain an advantage over Apple’s stock price.
With the launch of Vision Pro just a few weeks away, we may not have to wait long to see if Apple’s slow start to 2024 is a fluke or a long-term trend.
Daniel Howley is a technical writer at Yahoo Finance. He has been covering the tech industry since 2011. You can check it out on Twitter @DanielHowley.
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