Loop Capital's analyst Ananda Baruah expressed concerns that Apple is likely to fall short of revenue expectations related to its iPhone sales, prompting the downgrade from buy to hold and a reduction in the price target from $370 to $330, indicating a potential 4% downside from the recent closing price.
Despite a 26% year-to-date increase in Apple's stock, attributed to advancements in artificial intelligence and cloud technology, the firm believes that the stock's current valuation at a five-year high of 36 times price-to-earnings is unsustainable without a fundamental catalyst.
Baruah noted that previous expectations of recovering reduced iPhone shipments due to supply issues are no longer valid, as the current slowdown appears to be more significant. This downgrade contrasts with the broader market sentiment, where 25 out of 43 analysts still maintain a buy or strong buy rating on Apple, reflecting a divided outlook on the company's future performance.
Following the downgrade, Apple's shares experienced a slight decline of around 1%