Apple started the new year on a tough note Tuesday, as analysts at Barclays downgraded the company's stock rating, citing concerns about slowing sales demand for its flagship iPhone.
Analysts cited recent sales surveys showing weak demand not only in developed markets but also in China. Barclays downgraded Apple's rating to “underweight.”
Barclays also lowered its price target for Apple from $161 to $160. Apple's stock price fell about 3% to 186.38 in pre-market trading following the downgrade.
“After a year of mostly unsuccessful quarters and stocks outperforming, we expect a rebound,” Barclays analysts said in a note. According to Bloomberg.
“Our research remains negative for iPhone 15 sales and mix, and we don't see any features or upgrades that could make iPhone 16 more attractive,” the analyst added.
The outlook is bleak on the heels of a stellar year for Apple, one of the so-called “Magnificent Seven” tech stocks along with Alphabet, Amazon, Meta, Microsoft, Nvidia and Tesla. These companies helped push for a massive “Santa Claus” rally on Wall Street to close out 2023.
Apple's stock price rose 48% in 2023, contributing to a general recovery for big tech companies. The company briefly achieved a valuation of $3 trillion for the first time in history.
Barclays expects Apple to continue growing in emerging markets next year, but not enough to offset weakness in major markets.
Analysts also expect a slowdown in Apple's services division, which includes features such as Apple TV+ and the Apple Music streaming platform. According to Barron's.
Regulatory developments surrounding the Apple Watch are likely to be another long-term headache for the tech giant. The company was temporarily banned from selling the latest version of the Apple Watch after trade authorities determined it infringed on a rival's patent for tracking blood oxygen levels.
But Apple won a temporary reprieve last week after a U.S. appeals court suspended the ban. The company had argued that it would suffer “irreparable harm” if the ban continued.
