Apple Faces Another Rating Downgrade Amid Challenging Start to 2024

Apple Inc. encountered a further setback on Thursday, witnessing a continued decline that resulted in an approximate loss of $176 billion in market value since the year commenced. 

This downturn follows Piper Sandler’s recent downgrade, marking the second brokerage this week to express apprehensions regarding the tech giant’s product demand, notably its flagship iPhone.

The company’s shares plummeted by 1.7% to $181.20 on Thursday, hitting an eight-week nadir. Should these losses persist, Apple could witness a staggering $47.4 billion erosion in its market capitalization for the day.

Piper Sandler’s lead analyst, Harsh Kumar, highlighted concerns in a client note, emphasizing apprehensions over handset inventories in the first half of 2024. 

Kumar pointed to potential challenges with dwindling growth rates for unit sales, primarily impacted by a deteriorating macro environment in China, a key market for Apple’s handset business.

Apple’s Demand Deceleration 

The brokerage downgraded Apple’s stock rating from “overweight” to “neutral” and slashed its price target by $15 to $205, citing underlying worries about the company’s trajectory amidst market headwinds.

Apple has grappled with demand deceleration since early last year, further exacerbated by 

holiday-quarter sales projections falling short of Wall Street estimates. This slowdown is attributed to various factors, including subdued consumer spending in China and heightened competition from local rival Huawei.

Kumar also highlighted additional challenges, including an ongoing patent dispute concerning the new Apple Watches and the impact of a robust US dollar, further exacerbating the company’s hurdles.

Barclays’ similar downgrade earlier in the week also spotlighted growth concerns within Apple’s iPhone business, flagging risks to its services division amid scrutiny over app store practices in several countries, including the United States.

Despite these challenges, analysts, on average, maintain a buy rating for Apple, with a median price target of $200, based on LSEG data, underscoring a cautiously optimistic outlook despite the recent turbulence in the tech giant’s trajectory.