Apple stock was lower again this week on an analyst downgrade but is looking to secure a low.
The $129 level is a crucial support for AAPL, with the stock trading at $127.84.
AAPL – Weekly Chart
Wedbush analyst Dan Ives has warned that demand headwinds could see the stock suffer. Ives shaved $25 from his Apple price target, lowering it to $175 per share. However, he was still ‘overweight’ on the company despite a “mixed” supply chain outlook and the possibility of reduced Mac and iPad orders.
Ives said supply chain pressures from the Foxconn-operating ‘iPhone City’ plant in Zhengzhou, China, will add between 8 million and 10 million iPhone units into the March quarter. However, he said that the current demand environment is “more resilient than the Street is anticipating” and reflected mainly in Apple’s drop in price.
Apple’s market value closed below US$2 trillion on Tuesday for the first time since June 2021 after the shares were also hit by a downgrade by Exane BNP Paribas. Exane analyst Jerome Ramel downgraded the company to ‘neutral’ from ‘outperform’ and cut his price target to $140 from $180.
Last year saw a -27% decline in shares of Apple (AAPL) which was the stock’s worst year since 2008. Delays in the production of iPhones and demand concerns hurt the stock, which had been seen as a safe haven. The stock is still above its 10-year average price, with downside risks.
According to data from Bloomberg, Apple shares were priced at around 20 times profit for the year ahead, which is down from recent highs above 30, but its 10-year average is 17. Apple’s shares were -12% lower in December, worse than the -5.9% drop in the S&P 500 and the worst monthly performance since May 2019.
Apple outperformed the S&P index in November due to its capital returns to shareholders through buybacks and dividends. The company also has a significant cash pot, and demand from loyal customers was seen as needing to be more impenetrable.
Despite the recent struggles, Apple is trading near enough to a 10-year valuation and could see a near-term low at this support level.
