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Thu Jul 21, 2022, 07:31 AM

Apple's Stock Gloom Spreads as More Analysts Trim Price Targets

Full disclosure: I own shares of AAPL.

Bloomberg

Apple’s Stock Gloom Spreads as More Analysts Trim Price Targets

Ryan Vlastelica
Wed, July 20, 2022 at 10:41 AM

(Bloomberg) -- More analysts covering Apple Inc. are cutting their share-price forecasts, signaling growing concerns about an economic slowdown that could hurt the sales of its products. ... Wells Fargo Securities and Morgan Stanley were the latest to lower their price targets, joining a drumbeat of brokerage firms that have recently reduced their stock forecasts ahead of the company’s quarterly results slated to be released next week.

Wells Fargo late on Tuesday cut its price forecast by about 10% to $185 citing a challenging macroeconomic environment and the surging US dollar and Morgan Stanley reduced its 12-month projection on the possibility of weak sales in Apple’s Mac and services businesses. Apple’s average analyst price target now currently stands at roughly $180. While that is about 19% above the tech giant’s stock price, the average has dropped from a March peak above $190.

Setting aside the headwinds that have broadly pressured the sector -- rising interest rates, slowing economic growth and soaring inflation -- Apple is also facing supply constraints related to Covid restrictions in China. In April, the company warned that it could take a $4 billion to $8 billion hit to revenues for the second quarter. Apple also plans to slow hiring and spending growth next year to cope with a potential recession, people with knowledge of the matter told Bloomberg News.

Its shares are down about 15% so far this year, outperforming the 25% drop in the Nasdaq 100 Index. While analysts have been cutting their share-price targets, a majority of them are still bullish, with about 75% recommending investors buy the stock.

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