Barclays downgrade sinks Apple and its suppliers on the stock market
Financial markets/economy
Posted by MoneyController on 03.01.2024
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Apple has been downgraded by Barclays: this has led to a fall in the value of the company on the stock market, but also in the shares of some of the companies involved in the US company's supply chain.
Barclays' downgrade of Apple (from "equal weight" to "underweight") caused a sharp fall in the share price: from USD 192 to USD 185 in a very short time (-4.11% between 26 December 2023 and 2 January 2024). The bank also lowered its price target from USD 161 to USD 160. Barclays' downgrade is mainly due to disappointing iPhone 15 sales in the Chinese market and an unpromising outlook for iPhone 16 sales.
In general, Barclays' analyst Tim Long says that it is difficult for Apple to continue to grow at the same pace. On the one hand, the upgrades and improvements to the latest iPhone models do not seem to be enough to persuade consumers to switch models so quickly. On the other hand, sales of its other devices - iPad, Apple Watch and Mac - and services - Apple Music and Apple TV+ - are unlikely to be able to compensate for any slowdown in iPhone sales.
The news of the downgrade has not only led to a fall in Apple's stock market value, but also in the value of companies involved in its supply chain. For example, as Sheila Chiang pointed out on CNBC, Taiwan Semiconductor Manufacturing Company (TSMC), a major semiconductor supplier, fell 2% in Wednesday's trading session. Foxconn also fell by 1.33%. The Taiwan-based company is the largest assembler and manufacturer of iPhones. Other companies that saw their ratings downgraded were Samsung Electronics, SK Hynix and LG Electronics.
Not all analysts are bearish on Apple. Chiang mentions Ray Wang of Constellation Research, who points out that there are between 200 and 300 million iPhones in circulation that will get replaced onto 5G in the next 24 months. Perhaps more than growth prospects, this downgrade is about the outlook for valuations, says Wang.
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