Barclays Cut Apple Stock Target Amid Production Problems

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Barclays Cut Apple Stock Target Amid Production Problems

Barclays Cut Apple's Stock Target Amid Production Problems

Analysts from Barclays have lowered their price target on Apple's stock. Earlier, Barclays had set a target of $144, which is now downward revised to $133 only. The reason for this downgrade in share price is the weakening demand.

Another reason is the issues related to the production and supply side that is plaguing Apple. But this is further exaggerated by the weak demand for Apple's products in the hardware categories.

According to experts, the problem faced by Apple was related to the cuts associated with production. But now, it has become a demand weakness that spans multiple product categories of Apple.

Apple's Service Business Slow Growth During Q1

Another thing highlighted by Barclay's analyst is the risk related to the service business of Apple during the first quarter. According to them, the growth rate of the service business was only 2.5% (YoY), while the market was expecting 5% growth.

Barclay has also lowered Apple's revenue by 7% as they believe that it is a more appropriate figure. In addition, the EPS for the FQ1 was revised to $1.85, which was around $2.02 earlier.

As for the FQ2, the estimates for Apple have also been lowered with a significantly lowered price target.

Barclays believes that Apple is trading at a premium of 20% to the S&P 500, which is a fair value. Even if we put aside the manufacturing issues of Apple, it seems that we are witnessing a catch-up scenario.

If we look at the revenue from the services sector, it is also in decline. And for 2023, the pressure will continue to weigh on the PE multiple and other fundamental measures.

And while we are talking about Apple, which relies heavily on consumer demand, let's not discount the prospects of a recession in the USA as well. And we still don't know about the challenges that 2023 could bring forth for Apple. Because the year 2022 was a difficult one for Apple and the rest of the tech sector as a whole.

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