Apple Shares Hit Seven-Week Low Following Barclays Downgrade

Apple Stock

Apple (NASDAQ:AAPL) witnessed a nearly 3.6% drop to a seven-week low on Tuesday after Barclays downgraded the shares of the tech giant, expressing concerns about weak demand for its devices throughout 2024, from the iPhone to the Mac.

Barclays is now the second brokerage to assign the equivalent of a “sell” rating to Apple, making it the stock’s highest number of bearish recommendations in at least two years, according to LSEG data. The company’s shares constitute a significant 7% of the S&P 500’s (.SPX) market weight, contributing to a 0.56% decline in the broader index on Tuesday. In 2023, Apple experienced a nearly 50% surge, reaching a record high in mid-December during a year dominated by strong performance from Big Tech.

Apple has been grappling with a slowdown in demand since early last year, and its holiday-quarter sales forecast fell below Wall Street estimates. Concerns about its performance in China, particularly with the resurgence of local rival Huawei, have added to the challenges.

Barclays analyst Tim Long expressed reservations about the iPhone 15 and anticipated a similar outlook for the iPhone 16, citing weak performance in China and subdued demand in developed markets. Long, with a four out of five stars accuracy rating for his Apple recommendations, noted the mounting risks for Apple’s services business, which has faced scrutiny in the U.S. and other countries over app store practices. The services segment has traditionally outpaced growth in Apple’s hardware division and now contributes nearly a quarter of the company’s total revenue.

Following Barclays’ downgrade, Apple’s market capitalization took a hit, losing over $100 billion as shares closed at $185.64. The brokerage downgraded the stock from “neutral” to “underweight” and reduced its 12-month price target by $1 to $160. Itau BBA’s “sell” rating before Tuesday was the only bearish recommendation on Apple since July 2022. Despite the recent downgrade, analysts, on average, still rate Apple as a “buy,” with a median price target of $200. The company currently trades at approximately 28.7 times its 12-month forward earnings estimates, significantly higher than the S&P 500’s 19.8.

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