Slower growth. Increasing competition. Expanding surveillance.
Apple is falling out of favor with investors in China as its once popular stock loses some of its luster. The tech giant's stock price has fallen 8.5% this year, wiping more than $300 billion from its market capitalization and underperforming the S&P 500 and Nasdaq 100.
However, all is not lost. Analysts say the stock price correction has made Apple's valuation more attractive, and that the company could surprise the world again with new products.
Apple stock is currently down 14% from its December high of $198.11, compared with a 10% rise in the S&P 500 and a nearly 9% rise in the Nasdaq 100 over the same period. ing.
Needham analyst Laura Martin told Yahoo Finance Live that a number of factors are worrying investors, including weak demand for iPhones, increased competition from China and increased regulatory scrutiny. .
Given the growing list of obstacles, many of Mr. Martin's colleagues have become bearish on the stock in the short term. Goldman Sachs removed Apple from its conviction list last month, while Barclays, Piper Sandler and Redburn Atlantic are among the companies it downgraded in 2024.
Earlier this week, Loop Capital analyst Ananda Barua lowered his price target for Apple from $185 to $170 and lowered his earnings forecast, citing weak demand, “weakening fundamentals,” Huawei and Xiaomi. competition is “sluggish,” he wrote in a note to clients. material impact. ”
“iPhone shipments are simply too low,” Baruah wrote. “At this point, we believe both street iPhone sales and revenue will improve. [estimates] 20% may be too high and Wall Street's overall earnings and EPS [estimates] 10% may be too high. ”
Baruah expects Apple's annual sales and profits to decline in 2024, something that hasn't happened since 2016.
And Apple's woes in China haven't gone away. According to a report by Counterpoint Research, domestic iPhone sales fell 24% in the first six weeks of this year, and Apple's market share fell below 16%. Chinese smartphone maker Vivo holds the largest domestic market share with 17.6%, followed by Huawei and Honor Device with 16.5% and 16.3% respectively.
TECHnaracy Research's Bob O'Donnell told Yahoo Finance Live that the road ahead will be tough for Apple, with the region accounting for nearly a fifth of the company's total sales in the most recent quarter. .
“I think the next few quarters are going to be tough,” O'Donnell said. “I want Apple to pull a rabbit out of a hat. They've done that in the past, and I don't believe they can't do it now.”
Even though excitement on Wall Street has waned, now may be the time to bet on Apple. Craig Johnson, chief market technician at Piper Sandler, told Yahoo Finance Live that the recent selloff has made the company's stock cheaper, making it a more attractive risk-reward proposition.
“Apple looks like a very attractive place for people to put their money at the moment because the company has a good balance sheet, a repeatable business model, good profit margins, and they have a significant Because we're buying back shares,” Johnson explained.
Analysts remain confident in the company's ability to regain momentum beyond its solid balance sheet. The Vision Pro headset and expected AI efforts are primarily seen as drivers of future revenue growth, along with additional revenue sources such as potential advertising.
“Demand is probably slowing down in China, but there's already a very affluent segment that is tapping into the ecosystem, so we need to add advertising to drive revenue growth,” Martin said. Ta. “Apple needs to find ways to add more services and software to increase subscription revenue and increase revenue per device.”
Martin is among a shortened list of analysts who maintain a buy rating on Apple. At the beginning of the second quarter, just over half of Apple's analysts rated the stock a “buy,” according to Bloomberg data. This makes Apple the second least popular Magnificent 7 stock after Tesla.
sheena smith Anchor of Yahoo Finance. Follow Smith on Twitter @SeanaNSmith. Have a tip about a deal, merger, activist situation, or more? Email seanasmith@yahooinc.com.
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