Another Wall Street analyst has downgraded Apple shares, based on fears that iPhone demand is getting weaker. Atlantic Equities has lowered its rating on Apple from “overweight” to “neutral” on account of their predictions that Apple will be reporting disappointing sales for the March quarter.
“[We see] signs that iPhone demand is starting to soften, limited visibility into the potential for future iPhone cycles and emerging challenges to the smartphone’s dominance at the centre of consumer technology,” the firm wrote in a note to clients.
Atlantic is the second Wall Street firm to downgrade Apple in the last week, following Longbow Research. We are, “seeing only a good, not great iPhone cycle,” Longbow analyst Shawn Harrison wrote in a note to clients.
James Cordwell, analyst at Atlantic, said that data points from Apple’s supply chain have “turned negative.” He also suggested that reports from suppliers were far more positive during the iPhone 6 cycle than they are at present. Significantly, 2014’s iPhone 6 and 6 Plus was the last supercycle for Apple in which it gave the iPhone a major overhaul.
“Tougher ASP [average selling price] comps and the lack of a volume ‘supercycle’ with the iPhone X will leave it difficult to build conviction in future cycles,” Cordwell wrote. “Meanwhile, there also appears potential that concerns could increase over Apple’s position at the centre of consumer technology, particularly given the growing consumer interest and rapid innovation in voice-based devices.”
Not everything is negative
Despite this downswing, Apple is still overall doing very well among analysts. According to FactSet, Apple currently has 28 “buy” ratings, nine “hold” ratings, and absolutely zero “sell” ratings among analysts. Analyst Neil Cybart has also convincingly argued that, more than ever, Apple is no longer reliant on purely the iPhone’s rise and fall to dictate its stock price.
Hey, not for nothing are some tipping the company to be the first company in history to pass the $1 trillion valuation mark in 2018!