Apple shares in the red in the first session of 2024. On the Nasdaq, the stock loses 3% after Barclays’ downgrade. Analysts fear a domino effect on financial markets.
Apple is no longer a buy for Barclays (and is worth 17% less). The stock, which had reached $200 at the end of 2023, is now rated "underweight" with a target price lowered by 17%. This move risks setting off chain reactions on global markets. Analysts’ concerns include service risks, iPhone sales, and the lack of recovery in other key sectors.
After the prolonged euphoria of the final months of 2023, Barclays’ decision raises questions about the fragility of the entire tech sector, paving the way for a potential corrective wave in the markets.
Why Barclays downgraded Apple
Barclays’ unexpected move was a cold shower on the financial markets, which were enjoying extraordinary growth. The impact of Apple’s downgrade to "underweight" was immediate, with European stocks trimming gains and US futures in the red.
Analysis of the reasons behind this downgrade reveals several concerns from Barclays analysts. In particular, the increase in risks related to Apple’s services, the concern about iPhone sales, and the absence of a recovery in key sectors such as Mac computers, iPads, and wearable devices. These doubts translate into a downward revision of the target price from 161 to 160 dollars, highlighting caution in evaluating the prospect of continued growth in the stock’s multiples.
The question now is whether Barclays’ judgment represents an isolated anomaly or whether it is the signal that many traders were waiting for to take profits after the months of euphoria of 2023. With numerous technical indicators signaling an overbought market , Apple’s downgrade could serve as a catalyst for a larger correction.
iPhone and services: Barclays’ fears
The Barclays downgrade highlights several key concerns for Apple. Barclays analyst Tim Long points out that the "lackluster" sales of the iPhone 15, especially in China, suggest similar weakness for the iPhone 16 and Apple hardware sales in general. The Chinese government’s decision to discourage iPhone use by government employees may have contributed to this situation.
The concerns aren’t limited to hardware sales. Long expects slowed growth in Apple’s profitable services business, partly due to regulatory scrutiny. Although CEO Tim Cook has highlighted “better than expected” growth in this area, Barclays expresses doubts about the sustainability of this growth in the long term.
The opinion of experts
Professional trader Antonio Lengua fears that this unexpected downgrade could catch the markets unprepared at the beginning of 2024, particularly in view of the quarterly reports.
“The King is Naked”, Lengua said, underlining how Barclays’ unexpected announcement could influence market participants and, if followed by other major business houses, trigger a broader bearish phase. The impact on volatility levels, with the VIX and VXN rising, could trigger portfolio reductions in volatility control funds.
According to other experts, not only Apple but also Asml, an important European chip manufacturer, has come into the spotlight with the cancellation of orders destined for China under pressure from the United States. This event, along with increasing US restrictions on technology exports to China, could have adverse impacts on industry giants such as Nvidia and Tsmc.
In conclusion, Barclays’ downgrade on Apple has shaken the markets at a time of great optimism. The fragility highlighted by the investment bank could signal a trend reversal, raising doubts about the solidity of the technology sector.
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The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.|
Original article published on Money.it Italy 2024-01-02 18:58:13. Original title: Apple non è più da comprare per Barclays (e vale il 17% in meno)
