"Shares have outperformed significantly YTD and have been perceived as a relative safe haven, however..." — Analyst Wamsi Mohan
From a note to clients that landed on my desktop Thursday:
We downgrade shares of Apple to Neutral from Buy and lower our PO to $160. Shares have outperformed significantly YTD (AAPL down 16%, S15INFT down 29%) and have been perceived as a relative safe haven. However, 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)...
We view the key risks as the following:
(1) a weaker iPhone 14 cycle as risk to consumer spending is elevated globally (especially in Europe) and lead time data has been moderating even for Pro models;
(2) weaker near-term Services trajectory where App Store and Licensing (Google payments), which account for over 60% of Services, have incremental risk of deceleration;
(3) stronger Pro-mix won’t offset decline in rev/profit if overall units decline (see Figure 3);
(4) stock performance is correlated to gross profit dollars that will likely decline y/y over the next few qtrs.;
(5) reversion to pre-COVID levels for iPads and partially on Macs; and
(6) pressure from a stronger dollar (headwinds from yen, pound approx. 20% y/y in C4Q, euro 15%, RMB 11% and while hedges/pricing provide some offset, demand destruction is likely).
Downgrades to Neutral from Buy, cuts target to $160 from $185.
My take: Bloomberg yesterday, BofA today. A one-two punch.