apple
‘s
Redburn Atlantic, which cut its stock price on Wednesday, said valuations have peaked as competitive headwinds remain.
Analyst James Caldwell changed his rating on the stock from “buy” to “neutral,” but kept his price target unchanged at $200.
Apple shares fell 0.4% to $184.49 in afternoon trading, bringing the year-to-date loss to 4.3%.of
S&P500
It rose 0.4% on the day.
“We expect iPhone to return to growth in 2024, but there is little hope for that.”
“There is room for upside in the coming years, and an overwhelmingly weak forecast for the expected March quarter could impact confidence in this outlook,” Caldwell said in a research note. ” he said.
Apple did not immediately respond. Request for comments.
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One concern Caldwell cited is the company’s competitiveness in China, where cheaper options from companies like Huawei are gaining market share.
According to data released by Counterpoint Research on January 2, Apple’s share of the premium smartphone market fell to 71% in 2023 from 75% the previous year. Huawei increased from 3% to 5%.
“Given the increasingly competitive environment[due to Huawei]and the environment becoming increasingly unconstructive for Apple due to geopolitical tensions, China is likely to be a drag on Apple’s performance in the coming years,” Caldwell said. There is certainly a risk that this will happen.”
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At the same time, he wrote, the stock’s valuation now reflects “Apple’s premium positioning.” The stock currently trades at about 27.6 times next year’s expected earnings per share, which is higher than the five-year average of 24.2 times.
Few analysts are optimistic about Apple stock.of 44 analysts tracked by FactSet.
,
25 people have rated the stock as a buy, 15 have rated it a hold and 4 have recommended a sell. This time last year, 30 out of 42 analysts were buying the stock, eight were holding it, and four were selling it.
Evercore’s Amit Daryanani, who has long been bullish on Apple stock, said in a Jan. 6 note that while investors’ concerns about iPhone demand are valid, he believes the recent drop in the stock price is a buying opportunity. Stated. The analyst rates Apple an outperform and has a price target of $220.
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“It is noteworthy that weak Chinese demand (a headwind for Huawei) is offset by strength in the US and other emerging markets (India),” Daryanani said. “Additionally, AAPL protects your revenue; [free cash flow] Even if demand slows, through both [gross margin] expansion and [operating expense] Control. “
Email Angela Palumbo at angela.palumbo@dowjones.com.