- Apr 12, 2001
Wall Street remains largely upbeat about Apple's stock heading into the second half of this year, as investors anticipate the so-called "iPhone 8" to be a hit among customers, but Hargreaves believes the stock has limited upside, as he said hype surrounding the hotly-anticipated device appears to be "priced in.""We are downgrading AAPL to Sector Weight and recommend investors reduce position sizes," said Andy Hargreaves, equity research analyst at Pacific Crest Securities, in a note to clients. "We believe AAPL anticipates strong performance in the iPhone 8 cycle, while providing relatively little weight to risks through the cycle or the potential for iPhone sales to decline in fiscal 2019."
Hargreaves anticipates the upside of the iPhone 8 to be offset by key risks, including the "potential for gross margin pressure, diminishing value of the mobile operating system, and the likelihood for declines in iPhone unit sales beyond the iPhone 8 cycle due to market saturation and elongating."
Hargreaves also believes iPhone sales will likely resume declining in 2019, as the iPhone 8 will result in above-average sales in 2018 that are unlikely to be matched once Apple returns to a normalized upgrade rate, similar to what happened after pent-up demand for the larger-screened iPhone 6 started to fade.
AAPL was trading at $153.85 at the time of publication, after opening at $154.34, but remains only slightly off its all-time high.
Article Link: Apple's Stock Price Dips Ahead of WWDC as Analyst Issues Rare Downgrade