(CTN News) – On Tuesday, Apple’s stock experienced a significant drop of nearly 3%, reaching its lowest point in seven weeks.
This decline was a result of Barclays downgrading the company’s shares due to concerns about weak demand for its devices, such as the iPhone and Mac, throughout 2024.
Barclays is now the second brokerage to give Apple’s stock a “sell” rating, contributing to the highest number of negative recommendations in at least two years, according to LSEG data.
The decrease in Apple’s stock,
Which represents 7% of the S&P 500’s market weight, caused the broader index to decrease by 0.4% on Tuesday.
However, it is important to note that Apple had a successful year in 2023, with a nearly 50% increase in stock value and reaching a record high in mid-December.
This success was largely driven by the strong performance of other Big Tech companies in the market.
Apple has been facing challenges with a slowdown in demand since early last year. The company has also projected lower sales for the holiday quarter compared to Wall Street estimates.
Additionally, Apple’s performance in China has been a concern, especially with the rise of local competitor Huawei.
Barclays analyst Tim Long expressed skepticism about the iPhone 15 and predicted that the iPhone 16 would face similar challenges. He cited weak demand in China and subdued demand in developed markets as contributing factors.
Furthermore, Barclays warned that risks were increasing for services business, which has faced scrutiny in various countries, including the United States, regarding its app store practices.
Based on LSEG data, Long has been given a four-star rating for his accuracy in recommending Apple. Over the past few years, the company has consistently outperformed Apple’s hardware segment and now contributes to nearly a quarter of the company’s total revenue.
The decrease in shares on Tuesday is expected to lead to a decline of around $90 billion in market capitalization.
Barclays has downgraded the stock from “neutral” to “underweight” and lowered its 12-month price target by $1 to $160. Prior to Tuesday, Itau BBA’s “sell” rating was the only negative outlook on since July 2022. On average, analysts consider Apple a “buy” with a median price target of $200.
The company’s current trading multiple, at about 28.7 times its 12-month forward earnings estimates, is significantly higher than the S&P 500’s 19.8.