Lightshed Downgrades Apple Stock Due to ‘Conservative’ iPhone Forecast and Declining Services

Apple Stock

Apple Stock (NASDAQ:AAPL)

LightShed Partners, an investment company, reduced their rating on Apple (NASDAQ:AAPL) shares on Friday due to concerns over a “more cautious” forecast for iPhone sales and a slower growth in Services. As a result, Apple stock declined in the market this morning.

Analysts Walter Piecyk and Joe Galone downgraded Apple stock from neutral to sell, setting a lower price objective for the company’s stock at $120 per share. They said that they expect the iPhone replacement cycle to extend beyond 2024 due to several factors, including decreasing carrier subsidies, lengthier phone payment plans, growing usage of eSIM, a lack of “significant” 5G applications, and probable economic downturn throughout the world.

In an investment note, the analysts stated, “We think Apple’s revenue shortfall last quarter was mostly driven by lower demand from the extended replacement cycle and not supply difficulties.” This contradicts the conventional narrative that supply issues were to blame.

Analysts claim that AT&T established a three-year payback term for cell phones on a limited basis two years ago, and Verizon followed suit. It is anticipated that T-Mobile will do something like elongating the interval between replacement cycles for Apple iPhones even more.

LightShed believes that the assumption that Apple’s growing Services business accounts for a significant chunk of the tech giant’s valuation is “aggressive.” It’s unlikely that the stock will “re-rate” higher due to this assumption. Apple’s Services revenue is expected to account for 24% of Apple’s total revenue by 2025.

During Friday’s premarket trading session, the price of Apple stock was slightly down.

Apple announced on Thursday that its Apple Music Classical app will be accessible to Apple Music users later this month at no additional cost.

Featured Image: Unsplash @ andywang02021

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About the author: I'm a financial journalist with more than 1.5 years of experience. I have worked for different financial companies and covered stocks listed on ASX, NYSE, NASDAQ, etc. I have a degree in marketing from Bahria University Islamabad Campus (BUIC), Pakistan.