Apple stock is in a sharp decline as investors evaluate a host of concerns ahead of the consumer electronics giant's September-quarter earnings report.
On Monday, BofA Securities analyst Wamsi Mohan said Apple iPad tablet sales are facing headwinds as demand slows following a big boost during the Covid pandemic. In a note to clients, Mohan said he expects iPad unit shipments to decline this calendar year and next.
"Although long-term prospects remain favorable, we see incremental risk to earnings and valuation over the short term given a backdrop of declining consumer demand," he said.
Mohan reiterated his neutral rating on Apple stock with a price target of 160. He downgraded Apple from buy on Sept. 29. At the time, he cited a slowdown in services revenue and relatively lackluster iPhone shipment data.
Apple Stock In A Funk
On the stock market today, Apple stock rose 0.2% to close at 140.42. But that's well below its recent high of 176.15, reached on Aug. 17.
In a negative sign, Apple stock is trading beneath its 50-day moving average line and 200-day line, according to IBD MarketSmith charts.
Last week, Wall Street analysts fretted about declining App Store sales.
Morgan Stanley analyst Erik Woodring said Apple App Store net revenue declined 5% year over year in the month of September, marking its worst decline ever. For the entire quarter, App Store sales fell 2%.
"We believe the recent App Store results make clear that the global consumer has somewhat de-emphasized App Store spending in the near term," Woodring said in a note to clients. "The App Store debate will likely remain a battleground for investors."
Woodring rates Apple stock as overweight, or buy, with a price target of 180.
Apple Earnings Report Due Oct. 27
Meanwhile, analyst reports indicate continued strong sales for the higher-priced Pro models of the iPhone 14. However, demand appears soft for the regular models of the iPhone 14.
Apple plans to report results for its fiscal fourth quarter on Oct. 27. Analysts polled by FactSet predict Apple earnings of $1.26 a share, up 2% year over year, on sales of $88.7 billion, up 6%.
Apple stock has been consolidating for the past 40 weeks with a buy point of 183.04, MarketSmith charts show. However, it is trading near the bottom of its base. And Apple stock has a worst-possible IBD Accumulation/Distribution Rating of E, indicating heavy selling by institutional investors.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
