Apple's Stock Falls On Analyst Downgrade

Apple Inc. (NASDAQ: AAPL) has been one of the primary U.S. companies caught in the middle of the trade war uncertainty. Two analysts issued new notes on Monday, and they have very different takes on the stock’s outlook.

The Analyst

Rosenblatt Securities analyst Jun Zhang downgraded Apple from Neutral to Sell and reiterated his $150 price target.

The Thesis

Zhang said Apple’s business is approaching a slowdown period that could cause its fundamentals to deteriorate over the next two to four quarters.

While disappointing new iPhone sales are at the core of the bearish call, he said not even Apple’s Services segment revenue is safe from the slowdown.

“After strong service revenue growth over the last 4 to 6 quarters and the launch of Apple Music and news, we believe service revenue growth will also decelerate,” Zhang wrote.

Weathering The Storm

Meanwhile, Wedbush analyst Daniel Ives reiterated his Outperform rating and $235 price target.

Ives said Wedbush’s latest round of checks in Asia suggest Apple is weathering the trade war storm quite impressively up to this point.

“In China specifically around demand, while the environment remains complex for Apple to navigate, thus far we have NOT seen many cracks in the armor post Huawei swirls and continue to estimate between 60 million to 70 million Chinese consumers will be in the window of an iPhone upgrade opportunity for Apple over the next 12 to 18 months,” Ives wrote in a note.

While the overall handset demand environment remains difficult, Ives reiterated his fiscal 2019 iPhone unit sales forecast of 180 million devices. Ives said near-term demand in Asia is better than feared, and Apple’s Services segment, which he already values at at least $400 billion, will continue to be a long-term growth driver for the company.

Price Action

Apple shares traded lower by 2.5% to $199.17 at time of publication Monday.

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