China’s smartphone market is experiencing a slowdown, with sales growth momentum stalling despite government subsidies that have been aimed at boosting demand. As a result, Jefferies, led by five-star analyst Edison Lee, believes that Apple’s (AAPL) latest iPhone model, the iPhone 16e, which started shipping on February 28, is likely to underwhelm due to its unattractive specifications and price comparison with the iPhone 14/15. Interestingly, this could potentially make the existing slowdown in China’s smartphone market worse.
The reason why the iPhone 16e may not be so appealing is because its AI features don’t seem to be a major draw for consumers, who prioritize camera features instead. Indeed, the iPhone 14 and 15 offer two cameras, whereas the iPhone 16e has only one. Therefore, Jefferies expects weak demand for the iPhone 16e, which may lead Apple to cut orders in the June quarter. This would be a significant blow to Apple’s revenue since China is a crucial market for the company.
However, it is worth noting that the slowdown in China’s smartphone market is affecting various brands differently. In fact, Huawei is the only brand seeing positive growth thanks to aggressive discounts and an easier year-over-year comparison, as its Mate 70 series was launched later than usual. In contrast, Honor and iPhone are experiencing negative year-over-year growth. As a result of Apple’s struggles in China, Jefferies has a Sell rating on AAPL stock with a $202.33 per share price target.
Is Apple a Buy or Sell Right Now?
Overall, analysts have a Moderate Buy consensus rating on AAPL stock based on 18 Buys, 11 Holds, and four Sells assigned in the past three months, as indicated by the graphic below. After a 39% rally in its share price over the past year, the average AAPL price target of $250.48 per share implies 3.4% upside potential.
