Apple stock target cut at Loop as iPhone strength wanes

Loop Capital analysts cut their 12-month target price on Apple stock (NASDAQ:AAPL) to $170 from $185, citing weaker demand, rising competition, and flattening iPhone Average Selling Prices (ASPs).

Against this backdrop, the brokerage firm also lowered its overall revenue and earnings estimates for APPL in the calendar year 2024.

“In this context notably we now project AAPL overall revenue and EPS to DECLINE YoY in CY2024 for the first time since 2016,” analysts said.

Loop Capital cautioned that short-term forecasts for AAPL, including the March quarter’s consensus estimates for iPhone sales, overall revenue, and EPS, are potentially vulnerable, with the June quarter facing significant risks.

The firm highlighted subdued iPhone unit sales due to a combination of weaker organic demand and increased competition. For the first time in years, Apple is also seeing a stagnation in iPhone ASPs, attributed to slowing capacity growth and a less favorable product mix.

“In fact, we currently believe that both Street iPhone units and revenue could be 20% too high (not a typo). And that overall Street revenue and EPS could be 10% too high,” analysts said.

As for the Apple stock itself, analysts said it “isn’t “expensive” per se… but not screaming cheap either.”

“It’s tough to discern if valuation is friend or foe currently, given AAPL is trading more in the middle of its recent trading range but with fundamentals softer,” they explained.

Analysts speculate that AAPL’s performance might fluctuate in the near term but expect a more stable outlook in the second half of 2024.

This improvement is anticipated due to less variability in estimates compared to consensus and potential new developments in generative AI and AR/VR, like VisionPro, acting as catalysts.