Apple stock set to open 2024 lower as Barclays cuts to sell on 'lackluster' iPhone sales
Barclays analysts downgraded the rating on Apple (AAPL) stock from Equal Weight to Underweight, expressing concerns about a prolonged period of weak results and the potential for multiple expansion not being sustainable.
Barclays is also going against the consensus as it anticipates higher Services-related risks in 2024. In response to these risks, Barclays cut the rating and set a price target of $160 per share on AAPL stock, which signals a near 17% downside risk.
Apple shares (NASDAQ:AAPL) are down 1.4% in pre-market Tuesday.
Barclays made adjustments following recent checks, revealing concerns about iPhone volumes, mix, and a lack of rebound in Macs, iPads, and wearables. The latest data points from China, particularly related to the iPhone 15, indicate a more challenging environment, coupled with ongoing softness in developed markets.
While there is some strength in emerging markets, it is insufficient to offset broader weaknesses.
“IP15 has been lackluster and we believe IP16 should be the same,” the analysts said in a note to clients.
Despite expectations for a largely in-line December quarter, analysts also revised their estimates for the March quarter below consensus. The bank anticipates the March quarter to align closely with seasonal trends, contrary to the Street's more optimistic modeling that remains 10 points above seasonal expectations.
Notably, Barclays has lowered revenue estimates for iPhones and Wearables in the March quarter, resulting in a decline in revenue and earnings per share in the low single digits compared to previous estimates.
On the Services front, the analysts noted that while the App Store is experiencing 10% growth in the December quarter, this rate is expected to decelerate to the
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