Quiver Quantitative - Apple (NASDAQ:AAPL) once a favorite among big tech stocks, is facing a challenging start to 2024 with growing concerns over iPhone sales. This week marked a notable shift in Wall Street's sentiment, as the company received its second analyst downgrade. Piper Sandler Harsh Kumar adjusted his rating for Apple to neutral from overweight, attributing his decision to a weak macroeconomic environment in China, a key market for iPhone sales. This follows a similar move by Barclays (LON:BARC), led by analyst Tim Long, who downgraded Apple to underweight. These changes reflect a broader caution among analysts about Apple's growth prospects, particularly regarding iPhone unit sales.
Coming into the new year, Apple was already the big tech company with the fewest bullish recommendations. Piper Sandler's recent downgrade further diminishes the company's buy-equivalent ratio, bringing the percentage of bullish analysts on Apple to a three-year low. This cautious stance is underpinned by Apple's unique position among its peers: it was the only major tech firm to see revenue contraction over the past four quarters. Analysts are now tempering expectations for Apple's fiscal 2024, projecting modest revenue growth and profit expansion.
Market Overview: -Apple faces a double downgrade whammy in a single week, fueled by mounting concerns about iPhone sales and a flagging Chinese market. -Analysts across Wall Street turn increasingly cautious on the tech giant, pushing its buy-equivalent ratio to a three-year low. -Apple's 2023 revenue decline and muted growth forecasts for 2024 further dampen investor sentiment.
Key Points: -Piper Sandler and Barclays (BCS) downgrade Apple citing weak Chinese demand and peaking iPhone unit sales growth. -Wall Street's growing bearishness on Apple stands in stark contrast to its optimism towards other big tech players. -Apple emerges as the only major tech company with four consecutive quarters of declining revenue. -Analysts predict meager 3.6% revenue growth and 7.9% profit expansion for Apple in fiscal 2024. The stock has shed over $155 billion in market value this year, nearing oversold territory.
Looking Ahead: -Apple's ability to reignite iPhone sales and navigate the choppy Chinese market will be crucial for regaining Wall Street's confidence. -The company's reliance on hardware compared to its tech peers with diversified revenue streams might be a contributing factor to its current woes. -Investors seeking growth in the big tech space are likely to favor companies with better prospects like Amazon (NASDAQ:AMZN), Meta (META), and Nvidia (NVDA). -Apple's future performance hinges on regaining its once-unshakeable foothold in the smartphone market and adapting to the evolving economic landscape.
Apple's stock performance has mirrored these concerns. After a strong rally last year, the stock has faced a downturn in early 2024, declining 5.2% and erasing approximately $155 billion in market value. This decline brings Apple's shares close to oversold territory, as they experience a continued slide over consecutive sessions. The company's financial and stock performance starkly contrasts with last year's gains, highlighting the market's shifting attitude towards Apple.
In comparison to Apple's waning analyst support, other big tech companies like Amazon, Meta, and Nvidia continue to garner a higher number of buy-equivalent recommendations. Apple's situation reflects a broader trend on Wall Street, where optimism remains for the tech sector overall, but specific concerns about Apple's near-term prospects have led to a more cautious approach from analysts.
This article was originally published on Quiver Quantitative