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.
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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."
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