Apple (AAPL) moved lower on Tuesday after UBS analysts lowered their rating on the tech giant, citing softness in iPhone demand.
UBS analyst David Vogt lowered his rating on Apple to neutral from buy but added $10 to his price target to $190 a share, noting "persistent softness in developed markets and data that indicates growth is likely to remain under pressure."
Vogt said Apple stock, which closed at an all-time high last night and trades at around 29 times earnings, remain expensive compared with the broader market. They are even more expensive when factoring in iPhone unit growth, which is likely to slow between 1% and 2% over the back half of the year.
Vogt pointed to weakness in a UBS Evidence Lab survey that showed "12-month iPhone forward purchase intent" down from levels seen at the end of last year, with outsized declines in the U.K., China and Japan.
Advances in other markets, Vogt said, may not be big enough to "drive long-term sustainable iPhone growth above mid-single digits".
Apple shares, which closed at a record $183.79 last night, were marked 0.26% lower in mid-day Tuesday trading to change hands at $183.32 each, a move that would still leave the stock up more than 40% for the year.
Better-than-expected iPhone sales of $51.33 billion powered overall group revenue for Apple over the fiscal second quarter ended in March. But its top line still slipped 2.5% to $94.84 billion.
That marked the second consecutive sequential decline, a rate Chief Financial Officer Luca Maestri said would likely carry over into the June quarter.
“The iPhone is truly a global product and we’re doing well in emerging markets right now,” Maestri told investors on a conference call in April. “That has helped us offset some macroeconomic challenges.”
Revenue from Apple's key services business -- which includes Apple Pay, iCloud and Apple TV --- rose 5.5% to $20.91 billion.
Hardware sales were soft, as expected: Mac sales fell 31% from a year earlier to $7.17 billion, Apple said. iPad sales were down 13% to $6.67 billion. Wearables sales, which include the AppleWatch, slipped 0.6% to $8.76 billion.
Apple's recent push into India, which includes the opening of its first retail stores in the Android-dominated market earlier this year, resulted in record March quarter revenue, estimated at $6 billion.
Markets in Mexico, Indonesia and the Philippines all tallied record high sales figures as Apple's installed base of devices topped 2 billion worldwide.
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