Apple shares plunge as analyst sees nothing in the iPhone 16 line that will turn around weak demand
A Barclays analyst today popped the balloon that was Apple's stock by reducing its rating on the shares to "underweight." That is Wall Street code telling hedge funds and mutual funds to underweight Apple in their portfolios. The shares recently came close to topping $200 but are down $6.64 or 3.45% to $185.89 on Tuesday afternoon. Even though Barclays cut its Apple price target by only one dollar to $160 from $161, the fact that the investment house cut its rating on Apple was enough to wreak havoc on the stock.
The research note from Barclays contained an ominous forecast from the firm that says the 2024 iPhone 16 line will not be enough to turn around declining iPhone demand. The note said, "We expect reversion after a year when most quarters were missed and the stock outperformed. Our checks remain negative on volumes and mix for iPhone 15, and we see no features or upgrades that are likely to make the iPhone 16 more compelling."
Barclays was just as bearish on the current iPhone 15 line before it was unveiled as its analysts worried that Apple would raise the price of the handsets and lessen demand. The Barclays analyst attached to the report, Tim Long, has an ironic name since he has typically been bearish on Apple (to be long a stock is to own it expecting to rise in price) since the firm started coverage of the tech giant in 2019. In the past, he called for a slowdown in the growth of Apple's second-largest business unit, Services, and also said that adding 5G support to the iPhone line in 2020 would not lead to higher sales.
Traders and investors are dumping Apple's shares today
We do expect larger 6.3-inch and 6.9-inch displays for the iPhone 16 Pro and iPhone 16 Pro Max respectively. The iPhone 16 Pro will join the 16 Pro Max and sport the Tetraprism periscope telephoto lens, and all four models will have the new "Capture" button which is now believed to start video recording with a tap.
In the world of Wall Street, funds might build their portfolios around an index, say the S&P 500. Apple makes up approximately 7.1% of that index and Barclays is recommending that such funds sell Apple to reduce the value of their Apple shares to below the 7.1% benchmark. As for the price target, you'll note that Apple is already trading well above the original $161 target as those numbers are just symbolic and do not indicate the exact price that the analyst expects the shares to hit.
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