A Wall Street analyst slashed his sales and earnings estimates for Apple as the consumer electronics maker faces weakening demand for hardware and services. However, Apple stock rose on Wednesday.
Barclays analyst Tim Long reiterated his equal weight, or neutral, rating on Apple stock. But he cut his price target on shares to 133 from 144.
On the stock market today, Apple stock climbed 2.1% to close at 133.49.
Long said he reduced his estimates for Apple's December and March quarters as well as its fiscal 2023 after doing a round of checks with the company's supply chain and sales channel partners in Asia.
Apple Cuts Orders With Suppliers
"What started out as production-driven cuts has moved to demand weakness across product categories," Long said in a note to clients late Tuesday. "We are also concerned by decelerating services growth."
In November, Apple warned that Covid-related restrictions at its main iPhone factory in China had significantly reduced its production of the iPhone 14 Pro and Pro Max models.
Last week, Nikkei Asia reported that Apple had reduced orders from suppliers for components for MacBook, Apple Watch and AirPods.
Long said he's been told that Apple has cut orders with its main chip supplier, Taiwan Semiconductor Manufacturing. Taiwan Semi plans to report fourth-quarter results on Thursday.
Apple Stock 'Fairly Valued At Best'
For Apple's December quarter, Long lowered his revenue target 7% to $113 billion. Analysts polled by FactSet expect Apple to post $123.4 billion in sales in the holiday quarter, down a fraction year over year.
Long cut his earnings estimate for Apple's December quarter to $1.85 a share from $2.02. Wall Street has been forecasting earnings per share of $1.98 in the period.
Apple stock has a middling IBD Composite Rating of 55 out of 99, according to IBD Stock Checkup.
"At a 20% premium to the S&P 500, we see the stock as fairly valued at best," Long said.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
