Goldman Sachs thinks Apple is massively overvalued right now

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Apple might not be worth as much as some investors think.
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Goldman Sachs may be Apple’s partner in Apple Card, but that doesn’t mean that its equity research division is a cheerleader for Apple in everything it does. In fact, the firm just cut its price target on Apple from $250 down to $233, and recommends that clients sell their Apple shares.

This is the third time that Goldman has downgraded its Apple earnings estimate since February 17. Analysts led by Goldman tech analyst Rod Hall think that Apple is headed for a reduction in iPhone demand this year. That’s likely to be followed by a shallower recovery headed into 2021.

“We also assume some lingering ASP (average selling price) weakness as consumers look to economize similar to what we have seen in prior downturns,” the firm wrote in a note to clients Friday, reported by MarketWatch. “In addition to this we believe that Services growth slows substantially in 2021 and that Services as a percentage of revenue actually stagnates in that year.”

If true, that’s particularly bad news for Apple which has relied on Services in recent years to help offset some of the decline in iPhone sales. That Services decline hasn’t necessary been seen yet, though. Recent reports suggest that Apple TV+ and Apple Music have both experienced increased interest during the coronavirus lockdown.

On the iPhone front, Goldman is expecting a 36% decline in iPhone unit demand in the second quarter of the year. This is despite the introduction of the new iPhone SE. It overall expecting a 24% decline in the first half of 2020.

Currently, Apple is trading at $283.95. By Goldman’s reckoning, that suggests it’s $50 overpriced.