Apple (AAPL) shares slumped lower Tuesday, extending their recent decline to the lowest levels in more than eighteen months, amid concerns that supply chain disruptions in China, as well as fading demand in key markets, will soften earnings for the world's biggest tech company.
Exane BNP analyst Jerome Romel cut his rating on Apple stock to 'neutral', from 'outperform', and lowered his price target by $40 to a share to $180 each, in a Tuesday note that highlighted weakened iPhone and Mac shipment estimates and cautious consumer spending.
Rome's views partly echo concerns expressed late last month by JPMorgan analyst Samik Chatterjee, who lowered his Apple price target by $10 to $190 per share while noting that the ongoing Covid disruption in China would take some 4 million from the tech giant's December iPhone sales, which he pegs at around 70 million.
Chatterjee, however, maintains an 'overweight' rating and says any hit to December quarter supplies will be made-up by follow-on demand over the three months ending in March.
Apple shares were marked 4.4% lower in early afternoon trading Tuesday to change hands at $124.22 each, pegging its market value at just below $1.99 trillion. The session trough of $124.19 was the lowest since June of 2021.
Apple will publish its December quarter earnings on January 26, with early estimates indicating a bottom line of $1.98 per share on revenues of $122.7 billion.
Apple CEO Tim Cook cautioned in late October that while iPhone demand has remained healthy, supply constraints for both the 14 Pro and the 14 Pro Max continued to persist heading into the key holiday season, even prior to the added restrictions at its key manufacturing plant in the Chinese city of Zhengzhou.
The Zhengzhou-based complex, which saw violent protests in late November as workers demonstrated against pay and working conditions in the 200,000-person plant run by Taiwan's Foxconn, is only now returning to normal levels of output following both a shortage of staff and strict conditions on movement and travel in around the city as part of Beijing's prior Covid policies.
iPhone revenues, in fact, were an important component of Apple's better-than-expected September quarter earnings, with sales rising 9.6% from last year to $42.62 billion.
Overall revenues, however, rose 2% from last year to an all-time high of $90.15 billion, helping Apple to a Street-beating fourth quarter earnings tally of $1.29 per share.
