Apple (AAPL) Extends Decline as BofA Downgrades to Neutral on More Balanced Risk/Reward

September 29, 2022 6:23 AM EDT
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Price: $140.94 -1.38%

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    46 Buy, 17 Hold, 5 Sell

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Bank of America analyst Wamsi Mohan downgraded shares of Apple (NASDAQ: AAPL) to Neutral from Buy.

The analyst believes the strong outperformance is “once again” at risk. Mohan reminds clients that Apple shares “have outperformed significantly YTD” due to the “safe haven” status.

“We see risk to this outperformance over the next year, as we expect material negative est. revisions driven by weaker consumer demand (Services already in slowdown and we expect products to follow),” Mohan wrote in a client note.

Downside risks to the stock include a weaker iPhone 14 cycle and near-term Services trajectory, stronger Pro-mix that won’t manage to offset decline if overall units decline, gross profit dollars declining, iPad and Macs underperformance, and FX pressures.

The price target is cut to $160 from the prior $185 per share to reflect lowered estimates. Mohan notes that new revenue/EPS estimates for 2023 are “significantly below consensus). Relative to the consensus, Bank of America analysts see risks to iPhone and iPad sales, deceleration in Services and in other products.

“Although Apple’s long-term prospects remain favorable, we see incremental risk to earnings and valuation over the near term,” Mohan concluded.

Apple shares are down 2.7% in pre-open Thursday.

By Senad Karaahmetovic

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