A Bank of America analyst downgraded shares of Apple to Neutral from Buy.
The analyst believes the strong outperformance is "once again" at risk. The analyst reminds clients that Apple shares "have outperformed significantly YTD" due to the "safe haven" status.
"We see risk to this outperformance over the next year, as we expect material negative est. revisions driven by weaker consumer demand (Services already in slowdown and we expect products to follow)," the analyst wrote in a client note.
Downside risks to the stock include a weaker iPhone 14 cycle and near-term Services trajectory, stronger Pro-mix that won’t manage to offset decline if overall units decline, gross profit dollars declining, iPad and Macs underperformance, and FX pressures.
The price target is cut to $160 from the prior $185 per share to reflect lowered estimates. The analyst notes that new revenue/EPS estimates for 2023 are “significantly below consensus). Relative to the consensus, Bank of America analysts see risks to iPhone and iPad sales, deceleration in Services, and in other products.
"Although Apple’s long-term prospects remain favorable, we see incremental risk to earnings and valuation over the near term," the analyst concluded.
Apple shares are down 2.06% on pre-open Thursday.
