We all know Apple. Every year and every quarter, the company has ups and downs. The company has not been bypassed by the drop in stock this year. Let's take a closer look at this topic.
According to foreign media reports, Wall Street has not been so optimistic about Apple for a long time. Affected by the "sell" stock rating, Apple's share price fell 2%.
Rosenblatt Securities downgraded the company's stock rating from “neutral” to “sell”, bringing the total number of analysts who saw the company down to Bloomberg to rise to 5-people. According to historical data compiled by Bloomberg, this is the iPhone manufacturer's highest "sell" rating since at least 1997. During this period, Apple released the iMac computer in August 1998, and the iconic iPod was released on October 2001.
According to Bloomberg data, Apple’s universal rating score (measuring a company’s share of “buy,” “hold,” and “sell” stocks) is currently 3.76 points – this is how Wall Street is increasingly cautious about the company. Another sign. This number is also the lowest since 2004.
The skepticism surrounding the company has become increasingly strong in 2019, and the five “sell” ratings it has received are all from this year. In April of this year, New Street Research and HSBC both downgraded their ratings on Apple stocks. Also, in January of this year, the proportion of companies that gave the stock a “buy” rating fell below 50% for the first time since 2004.
To a large extent, this cautious attitude is caused by the uncertainty of demand in the US market around Apple's vital iPhone product line. In January of this year, Apple lowered its revenue forecast for the first time in nearly 20 years, largely because of the weak demand for the iPhone. Apple's third-quarter financial report is expected to be announced on July 30.
According to data compiled by Bloomberg, more than 60% of Apple's 2018 revenues come from the iPhone, and about 20% come from the Chinese market. China is also an important part of the Apple product supply chain. Last week, Citi wrote that Apple’s sales in China may be halved because the brand image is not as attractive as it used to be.
While Rosenblatt lowered Apple's rating, the analyst expects the company's performance to substantially deteriorate in the next 6-12 months due to disappointing sales trends. He said that the culprit is the iPhone, Apple's current $1,000 mobile phone sales will continue to be "disappointing", they are difficult to replicate the iPhone's exhilarating performance in the past.
He also pointed out that, even worse, the company's other products will not be able to bring enough help, so Apple will not be able to make revenue data meet investor expectations. The sales growth of the iPad will slow down in the second half of 2019, and the growth of Apple's 'other products', such as HomePod, AirPod, and iWatch, may not help much to support total revenue growth.
The downgrade of the rating caused Apple's share price to fall by a maximum of 2.9%.
However, the increase in the "sell" rating is also difficult to represent a consensus on the market for Apple. According to data compiled by Bloomberg, as many as 23 companies are currently recommending the stock and 21 are given a “hold” rating.
The level of caution shown on Wall Street in 2019 is not reflected in Apple's stock performance. Compared with the January low, the stock has risen by more than 40%, although it is still about 14% lower than the historical high.
However, for Apple, the news is not entirely negative. As wrote, after investigating in Asia, they found that "global iPhone demand is getting better." Analyst wrote that although the overall demand for mobile phones is still challenging, in our survey, we found that the performance of Apple suppliers has increased slightly. He maintained his "appreciation of Apple" Outperform the market" rating and target price of $235.