Apple (AAPL) -) shares moved firmly lower in early Tuesday trading after analysts at Barclays issued a rare downgrade for the tech giant, citing softening iPhone demand that could lead to a "prolonged period of weak results" for the world's most-valuable company.
Barclays analyst Tim Long lowered his price target on Apple by $1, to $160 a share, and clipped his overall rating on the group to underweight from equal-weight.
In a client note published Tuesday, he added that a lackluster iPhone 15 launch, as well as a muted rebound in Mac and iPad demand, would hold back both holiday sales and 2024 revenue.
Long also sees the potential for contraction in growth for both iPhone and wearables sales over the first quarter of this year, with overall revenue also pressured by a slowdown in Apple Store growth.
“We expect reversion after a year when most quarters were missed and the stock outperformed,” Long wrote. “Our checks remain negative on volumes and mix for iPhone 15, and we see no features or upgrades that are likely to make the iPhone 16 more compelling.”
Apple shares were marked 3.22% lower in early Tuesday trading immediately following the Barclays downgrade to change hands at $186.13 each.
Apple assembler Foxconn optimistic
While only the second sell rating for Apple from analysts on Wall Street, the new Barclays' assessment puts the number of bearish ratings on the tech giant at the highest levels in more than two years. The stock touched an all-time high of $199.62 in mid-December.
That move, which capped a 2023 gain of around 54%, was given a late-year boost from Apple's key assembler, Taiwan-based Foxconn, which lifted its fourth-quarter growth forecasts amid improving consumer demand.
Foxconn, arguably the most important company in Apple's global supply chain, said current-quarter revenue would be better than its early autumn forecast for "significant" growth.
"The second half of the year is the traditional peak season for the [information and communication technology] industry," Foxconn said in a statement emailed to TheStreet. "Revenue performance in the first two months of the fourth quarter has been slightly higher than expected."
"Therefore, the outlook for the fourth quarter should be better than the original guidance for "significant growth," Foxconn added.
Apple said December-quarter sales would likely be flat with the $117 billion total recorded over the year-earlier period, a forecast that fell shy of Wall Street's 5% gain and followed the tech giant's fourth consecutive sequential revenue decline and big pullbacks in Mac, iPad and Apple Watch sales.
Group revenue ticked down 0.7% to $89.5 billion, just ahead of the Wall Street consensus forecast of $89.3 billion. iPhone sales surprised to the upside with a 2.8% gain and a $43.81 billion total.
Earnings for the quarter were up 13% to $1.46 a share, powered for the most part by solid services revenue – Apple's widest-margin business – and a record overall total for its global installed user base.
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