Apple (AAPL) stock witnessed a decline in its stock price on Thursday, with shares falling over 3% to close at $243.85. This drop is mainly due to investment firm UBS reducing its estimates for Apple, pointing to weaker iPhone sales, especially in the Chinese market.
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UBS Lowers Sales Projections
UBS analyst David Vogt now estimates iPhone sales for the December quarter at around 74 million units, down 5% from last year and below the Wall Street consensus of 77.5 million units. As a result, Apple’s iPhone revenue is also expected to decline by 5% for the quarter.
However, despite weak iPhone sales, Vogt raised his prediction for Apple’s Services revenue, thanks to strong results from the App Store.
Even with this improvement, he expects Apple’s total revenue for the December quarter to be $120.8 billion, lower than his earlier estimate of $123.3 billion. He also reduced his earnings estimate for the quarter to $2.25 per share, down from $2.31 per share. These figures fall short of the consensus among analysts, who anticipate Apple earning $2.35 per share on revenue of $124.3 billion.
Chinese Rivals Gain Ground
It’s important to highlight that China, Apple’s second-largest market, presents significant challenges due to growing competition from local smartphone makers like Huawei. Huawei’s latest Mate 70 smartphone, equipped with advanced AI features, is attracting consumers and taking market share from Apple.
To counter this, Apple recently introduced discounts of up to 500 yuan (about $68.50) on iPhone models in China. Also, to stay competitive, Apple is exploring new partnerships with Chinese companies like Tencent and ByteDance. These partnerships aim to add AI features to future iPhones, matching Chinese market needs.
Whether Apple can reclaim its momentum will depend on its ability to innovate and connect with consumers worldwide.
Is Apple a Buy or Sell Right Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AAPL stock based on 16 Buys, six Holds, and two Sells assigned in the past three months, as indicated by the graphic below. After a 33% rally in its share price over the past year, the average AAPL price target of $248.08 per share implies 1.73% upside potential.
