Apple (AAPL) is the worst Dow Jones stock Tuesday after financial services firm Jefferies downgraded the tech giant to Underperform (equivalent to a Sell) from Hold and lowered its price target to $200.75 from $211.84.
Apple stock returned more than 30% in 2024, but Jefferies analyst Edison Lee is concerned that "weak demand for the iPhone has materialized," while other products, such as the iPad and MacBook, may also disappoint due to a "weak" consumer electronic market.
"We expect AAPL to miss its revenue growth guidance of 5% for the first quarter of fiscal 2025 and guide to only low single-digit revenue growth in the second quarter of fiscal 2025, also below consensus," Lee says.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The company's artificial intelligence (AI) outlook is "subdued" and industry checks suggest Apple's "advanced packaging roadmap for iPhone may face a delay is another negative sign," Lee adds.
The new price target of $200.75 implies downside of more than 9% to current levels.
Most of Wall Street still rates Apple a Buy
The majority of Wall Street remains bullish toward the tech stock, suggesting investors shouldn't be too worried about Jefferies' downgrade of the mega cap.
According to S&P Global Market Intelligence, the average analyst target price for AAPL stock is $246.14, representing implied upside of about 11% from current levels.
Additionally, of the 46 analysts covering the blue chip stock tracked by S&P Global Market Intelligence, 23 have it at Strong Buy, eight call it a Buy, 11 say it's a Hold, and just four call it a Sell or Strong Sell. This works out to a consensus recommendation of Buy and with strong conviction.
Financial services firm CFRA Research is one of the more bullish outfits on AAPL stock with a Buy rating and a $260 price target.
"We still like the AAPL story given its aging installed base and broadening AI features and geographic availability that will support upgrades (we expect China partnership announcements soon), potential higher prices, higher Services revenue, a strong pipeline not reflected in estimates, and margin upside being underestimated," wrote CFRA Research analyst Angelo Zino in a January 16 note.
However, the analyst warned of "muted China demand" and "recent forex moves" as creating possible "downside risk to consensus estimates."
Related Content
-
Stock Market Today: President Trump Reboots the Tariff TradeA broad consensus that markets hate uncertainty more than anything else is being tested on an almost daily basis in 2025.
-
Electric Car Owners Can’t Avoid Road Taxes in 2025New Taxes Hawaii launched its new EV road usage fee in July. Here’s why some states are implementing similar new electric vehicle taxes across the nation.
-
Stock Market Today: President Trump Reboots the Tariff Trade
A broad consensus that markets hate uncertainty more than anything else is being tested on an almost daily basis in 2025.
-
The 60-40 Portfolio Rule of Investing: Not Dead Yet?Adding alternative investments to a balanced portfolio can smooth out returns.
-
The Hidden Costs of Caregiving: Crisis Goes Well Beyond Financial IssuesMany caregivers are drained emotionally as well as financially, leading to depression, burnout and depleted retirement prospects. What's to be done?
-
Cash Balance Plans: An Expert Guide to the High Earner's Secret Weapon for RetirementCash balance plans offer business owners and high-income professionals a powerful way to significantly boost retirement savings and reduce taxes.
-
Five Things You Can Learn From Jimmy Buffett's Estate DisputeThe dispute over Jimmy Buffett's estate highlights crucial lessons for the rest of us on trust creation, including the importance of co-trustee selection, proactive communication and options for conflict resolution.
-
I'm a Financial Adviser: For True Diversification, Think Beyond the Basic Stock-Bond PortfolioAmid rising uncertainty and inflation, effective portfolio diversification needs to extend beyond just stocks and bonds to truly manage risk.
-
I'm a Retirement Psychologist: Money Won't Buy You Happiness in Your Life After WorkWhile financial security is crucial for retirement, the true 'retirement crisis' is often an emotional, psychological and social one. You need a plan beyond just money that includes purpose, structure and social connection.
-
Recent Market Volatility Offers Valuable Lessons for InvestorsStocks will always rise and fall, but strategic investors can benefit through dollar-cost averaging, rebalancing in down markets and taking the long view.
