Apple (AAPL) stock is poised for a pullback as it confronts a series of headwinds, ranging from geopolitical risks in China to waning demand for its flagship products like the iPhone, according to MoffettNathanson analyst Craig Moffett. As a result, the analyst has downgraded the stock to a Sell from a Hold citing rising concerns over lofty valuations following a 30% rally in 2024. Furthermore, Moffett lowered his price target on the stock to $188 from $202, citing a “steady drumbeat of bad news.”
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The analyst’s price target implies a downside potential of 23% from current levels.
Why Has Moffett Downgraded AAPL?
Explaining the rationale behind the downgrade, Moffett pointed out that AAPL is facing multiple headwinds. One key issue that arises is from last year’s antitrust ruling that deemed the payments made by Google (GOOGL) to Apple for maintaining its default search engine status in the iOS ecosystem as illegal.
Additionally, geopolitical risks tied to China remain significant. While Apple might avoid U.S. export tariffs that could be imposed by incoming President Donald Trump, it could still face retaliatory measures from China, which could disrupt its supply chain. In addition, Moffett noted Apple’s eroding market position in China as competitors like Huawei continue to gain ground.
Apple Products Get Cool Reception
Furthermore, the performance of the tech giant’s products remains a sore spot. For instance, the Vision Pro headset, failed to meet even modest expectations, according to Moffett. Meanwhile, the iPhone 16’s sales have been underwhelming, and the reception to Apple’s AI initiative, Apple Intelligence, has been lukewarm. This is especially concerning given the rapid strides in AI innovation by rivals such as Microsoft (MSFT).
“As great a company as Apple is, the outlook for its shares, given this challenging backdrop, is decidedly unattractive,” Moffett remarked.
Despite these concerns, Moffett remains one of the few bearish voices on Wall Street, where optimism about Apple largely persists.
Is Apple Stock a Buy, Hold or Sell?
AAPL is rated as a Moderate Buy, according to 29 Wall Street analysts who provided 12-month price targets within the last three months. Among these, 19 analysts issued Buy ratings, seven recommended Hold and three gave Sell ratings. The average AAPL price target is $244.77, which implies 0.66% change from the last price of $243.16. AAPL shares have increased by more than 30% in the last year.
