AAPL stock was trading at $142.96 as of 11:31 AM EDT
AAPL stock (NASDAQ:AAPL) dropped on Thursday as a result of investment bank Bank of America downgrading the tech titan on concerns over waning consumer demand. Analyst Wamsi Mohan lowered his rating on Apple (NASDAQ:AAPL) to neutral from buying and cut his price target to $160 from $185 while also lowering fiscal 2023 estimates. With the stock only down 16% year-to-date compared to the wider indices, it has excelled, but that may be coming to an end, Mohan added.
“We see risk to this outperformance over the next year, as we expect material negative [estimates] revisions driven by weaker consumer demand (Services already in slowdown and we expect products to follow),” Mohan wrote in a note to clients. The analyst cut his fiscal 2023 expectations to revenue of $379 billion and $5.87 per share in earnings, below the consensus estimate of $412 billion and $6.46 per share. AAPL stock fell 2.5% to $146.19 in premarket trading.
According to Mohan, the iPhone 14 cycle may not be as strong as expected because there are still significant risks associated with consumer spending, and lead time data has begun to level off, even for Pro models. There’s also a concern for its near-term services business, as there is an “incremental risk” of deceleration, even with the App Store and Licensing accounting for 60% of revenue.
Other worries include a stronger mix towards the iPhone 14 Pro not being able to offset a decline in revenue and profit if overall iPhone units decline, a reversion to pre-COVID levels for the iPad and Mac, as well as pressure from a stronger U.S. dollar.
AAPL outlook, earnings forecast
In addition, Mohan said that he now expects 219 million iPhone sales, down from the 245 million that Wall Street had predicted, and $22 billion in iPad income, considerably less than the $31 billion that Wall Street had predicted. Services revenue is also expected to come in below consensus estimates, at $85 billion compared to $88 billion.
Cupertino, California-based Apple (NASDAQ:AAPL) confirmed earlier this week that it would produce some iPhone 14 units in India.
Analysts are largely cautious about Apple (NASDAQ:AAPL). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. In contrast, AAPL is rated as a HOLD by Seeking Alpha’s quantitative approach, which consistently outperforms the market.
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