In a significant blow to Apple Inc., shares took a nosedive on Tuesday, tumbling 3.6% – the most extensive one-day percentage drop since September. The plunge resulted from Barclays Plc’s downgrade of Apple stock, with analysts led by Tim Long expressing concerns about soft demand for the latest iPhone models.
Barclays lowered Apple’s rating to underweight and adjusted the price target to $160, a downgrade of $1 from the Tuesday closing price of $185.64. The downgrade comes as analysts anticipate a reversion, highlighting a year where Apple’s performance exceeded expectations, but doubts arise regarding its sustainability.
“We expect reversion after a year when most quarters were missed and the stock outperformed,” noted the analysts in a Tuesday statement. Their assessment remains pessimistic about volumes and mix for iPhone 15, with no perceived features or upgrades that could make the iPhone 16 more compelling.
The 3.6% drop in Apple’s shares equated to a staggering loss of over $107 billion in market value. This setback follows a remarkable 50% surge in Apple’s shares last year, propelling its market value to a historic $3 trillion. However, concerns have emerged about the company’s ability to replicate such gains, given intensifying competition, particularly from Huawei Technologies Co., and the Chinese government’s crackdown on foreign-made devices.
With this downgrade, Apple now has five “sell” or equivalent ratings, according to Bloomberg data, in stark contrast to 34 “buys” and 14 “holds.” The stock’s recommendation consensus, a gauge of its buy, hold, and sell ratings, stands at 4.08 out of five, marking its lowest level since October 2020. Analysts, on average, predict a modest 7.5% return over the next year based on the current price target.
As Apple grapples with this market setback, the tech giant faces a challenging landscape as it navigates through competitive pressures and seeks to revive confidence in its future product offerings.
