Shares of Apple Inc. (NASDAQ: AAPL) moved lower Tuesday following the decision by UBS analysts to downgrade the tech giant. The reason cited for this downgrade was a decrease in iPhone demand.
David Vogt, an analyst at UBS, revised his rating on Apple from ‘buy’ to ‘neutral’ and reduced the price target by $10 to $180 per share. Vogt highlighted the ongoing softness in developed markets and shared data indicating that Apple’s growth is likely to face continued pressure.
Vogt expressed concern about the relatively high valuation of Apple stock, which closed at a record high recently and is trading at approximately 29 times earnings. He noted that this makes the stock expensive compared to the broader market, especially considering the anticipated slowdown in iPhone unit growth. Moreover, he believes that iPhone unit growth is expected to slow between 1% and 2% in the latter half of the year.
To support his assessment, Vogt referenced a UBS Evidence Lab survey that revealed a decline in “12-month iPhone forward purchase intent” compared to levels seen at the end of the previous year. Notably, significant drops were noted in the U.K., China, and Japan. Although there were some advancements in other markets, Vogt expressed doubts about their ability to generate significant long-term sustainable growth for the iPhone beyond mid-single digits.
Pre-market trading indicated a 0.9% decline in Apple shares, suggesting an opening bell price of $182.16 per share. Despite this setback, the stock is still up over 40% for the year, after closing at a record high of $183.79 the previous night.
