Beyond The Downgrade

Beyond The Downgrade

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  • Apple experienced a nearly 3.6% decline, reaching a seven-week low, following Barclays' downgrade of the world's most valuable company. Concerns about continued weak demand for Apple's devices, including the iPhone and Mac, in 2024 led to the downgrade. This marks the second brokerage to issue the equivalent of a "sell" rating on Apple, resulting in its highest number of bearish recommendations in at least two years, affecting the S&P 500's market weight. Despite a remarkable 50% surge in 2023, reaching a record high in mid-December, Apple has been grappling with a demand slowdown since early last year. The holiday-quarter sales forecast fell below Wall Street estimates, and challenges persist in China amid increased competition from local rival Huawei.
  • Barclays analysts expressed concerns about the lackluster performance of the iPhone 15 and anticipated similar challenges with the iPhone 16, citing weakness in China and subdued demand in developed markets. Barclays also highlighted rising risks for Apple's services business, which accounts for nearly a quarter of the company's total revenue. Mounting scrutiny in countries, including the United States, over app store practices poses potential challenges for this segment. The stock's downturn on Tuesday wiped out over $100 billion of Apple's market capitalization, prompting Barclays to downgrade the stock to "underweight" from "neutral" and reduce its 12-month price target to $160.

Why it matters

Amid Apple's recent market turbulence, the downgrade by Barclays signals growing concerns about the tech giant's resilience in the face of persistent weak demand, particularly in crucial markets like China.


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