by Apple (AAPL) is having a happy new year, as the company’s stock hit its third downgrade in less than two weeks on Wednesday. The latest sting comes from Redburn Atlantic’s James Cordwell, who downgraded the stock to Neutral while keeping his price target at $200, fearing slowing iPhone sales and the potential for regulatory headwinds.
Barclays and Piper Sandler also issued downgrades on Apple stock last week, with Barclays’ Tim Long saying the stock was from Equal Weight to Overweight and lowering his price target from $161 to $160. Meanwhile, Piper Sandler’s Harsh Kumar downgraded Apple stock to Neutral.
Shares of the tech giant fell about 4% in the first few days of 2024, as of Wednesday afternoon. On the other hand, shares of Apple’s Big Tech peers, including Microsoft (MSFT), Google (GOOG, GOOGL), and Meta (META), are up 1.9%, 2.2%, and 4.9%, respectively.
In general, Redburn Atlantic, Barclays, and Piper Sandler point to potential weakness across Apple’s iPhone and services segment. Barclays Long and Piper Sandler’s Kumar both point to China as a major concern, with Long saying Barclays’ latest checks show incrementally worse iPhone 15 data points out of the region, and Kumar citing a deteriorating macro environment in the China.
Greater China is Apple’s third largest revenue driver behind North America and Europe. In 2023, this area accounted for $72.6 billion of $383.3 billion in total company revenue.
According to Long, while Apple should report December quarter revenue in line with market expectations, the company will report March revenue below market consensus.
Kumar, for his part, says negative news surrounding the ongoing Apple Watch patent controversy and antitrust fights could be problematic for Apple going forward.
Most analysts remain positive on Apple
But Wall Street isn’t completely down on the iPhone maker. Of the 53 analysts that track Apple, 32 maintain Buy ratings, and 16 have Hold ratings. Only five analysts have Sell ratings on the stock.
Evercore ISI’s Amit Daryanani reiterated his Outperform rating on Apple with a price target of $220, saying now may be the time to buy the dip in the company’s stock price.
And while he acknowledges that the Apple Watch bans are problematic and that Apple’s multibillion-dollar deal to make Google the default search engine in Safari could be at risk, there are more positives than negatives to the story of Apple.
“As some of the fears subside as we move to a more positive news flow (Vision Pro), [Apple] it may start to re-rate more positively,” wrote Daryanani.
Erik Woodring of Morgan Stanley says that 2024 Apple could offer a big lift for the company.
“We believe that not only are the fundamentals on the path to recovery (although there is some short-term volatility), but more importantly, 2024 is the year when Apple’s ‘Edge AI’ opportunity will likely come to fruition, as demonstration by LLM about driving. Siri 2.0 and a broader Gen AI-enabled operating system (introduced at WWDC in June) have the potential to catalyze the iPhone upgrade cycle,” he wrote in a note to investors.
Apple hasn’t specifically announced an AI generation offering, instead focusing on machine learning to improve the accuracy of its autocomplete feature. But the company is reportedly working hard to integrate the technology into its future products.
Apple could also benefit from an expected revival in laptop and desktop sales, as consumers who bought computers at the start of the pandemic start looking for newer, faster systems.
All this comes as Apple prepares to launch its $3,499 Vision Pro space computing headset in February. Pre-orders for the device begin January 19. Apple’s first new product category in nearly a decade, the Vision Pro is expected to get off to a slow sales start due to its relatively high price.
And depending on how the Vision Pro rollout goes, Apple could drive significant interest in the headset among both consumers and enterprise users. No, most people won’t be able to afford the Vision Pro out of the gate, but even creating buzz around the product could benefit Apple’s stock price.
With the Vision Pro launch just a few short weeks away, we won’t have to wait long to see if Apple’s slow start to 2024 is a fluke or a long-term trend.
Daniel Hawley He is the technology editor at Yahoo Finance. He has been covering the tech industry since 2011. You can follow him on Twitter @Daniel Howley.
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