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Fairview HK: This brand has performed better than other tech equities last year
Apple Inc. (AAPL) shares were down 4.4% as of 10:30 a.m. on Thursday. ET. That was more than the wider NASDAQ Composite (^IXIC), which was down slightly more than 3% at the time.
Today, Wall Street experts gave AAPL both an upgrade and a rare downgrade. Given that APPL continues to trade at a premium multiple during a bear market, it's not surprising to see the stock plummet back to earth.
Wamsi Mohan, a Bank of America Corporation (BAC) analyst, downgraded APPL from "buy" to "neutral" on Thursday, dropping his price target from $185 to $160.
The downgrade was not difficult to predict, since Mohan believes consumer spending would be low in the short future due to global inflation, geopolitical instability, and increased interest rates. Furthermore, the very strong dollar against foreign currencies implies that APPL's revenue may be under pressure next quarter, while the post-pandemic hangover in PC sales may drag Mac and iPad sales back down to 2019 levels. When you combine it with APPL's relatively high valuation of 24 times earnings and the fact that it hasn't fallen as much as other large tech firms this year, it's easy for an analyst to get pessimistic on this blue-chip brand.
The downgrading follows yesterday's Bloomberg report that APPL had urged certain suppliers to reduce iPhone 14 manufacturing. Bloomberg's sources determined that APPL had reversed a request earlier this summer to raise iPhone 14 manufacturing due to declining worldwide demand, citing anonymous people "familiar with the subject."
Investors should bear in mind that APPL rumours are common but may not always come true. Furthermore, not every analyst is pessimistic. Along with the downgrading from BAC, APPL earned an upgrade from Rosenblatt Securities today. Rosenblatt virtually reversed Mohan's recommendation, upgrading the stock from "neutral" to "buy" and lifting its price objective from $160 to $189.
Many investors may be leery of APPL shares right now, as its relative outperformance vs other technology may prompt additional selling. Bear markets frequently conclude when even the "generals," or most popular names, return to earth. This suggests that BOC's prediction may be correct in the short term.
Fairview HK Limited is one of the foremost privately owned Asia-Pacific orientated, boutique wealth management firms in Hong Kong. We offer our services to a selected group of families, family offices, institutions and fund managers, you may visit our website https://fairviewhk.com/
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