Adding to the negativity surrounding Apple (AAPL) over the last couple of months, Jefferies cut its price target for the stock. Lately, reports about weakening iPhone sales, especially in China, along with fears of tariffs on Apple’s Chinese-imported devices, have taken a heavy toll on investor sentiment. This negativity, coupled with the broader market sell-off (QQQ)(VTI), has caused a steep drop in Apple stock. As of yesterday, the stock has lost 26.4% of its value. Now, let’s take a closer look at what analysts at Jefferies have to say about Apple.
Jefferies cuts its target price
According to a recent CNBC report, Jefferies analyst Timothy O’Shea, in a note to clients, said Wall Street analysts’ estimates for Apple “may still be too high” and that “it could get worse before it gets better.” Adjusting its estimates with weak iPhone sales, Jefferies has “lowered its 2019 estimates for iPhone revenue by 3 percent and for Apple’s profit by 4 percent.” O’Shea cut his price target for Apple stock to $225 from $265, a drop of 15.1%, but he still maintains a “buy” on the stock. Jefferies’s new price target of $225 suggests about 35.5% upside potential from Apple’s December 18 closing price of $166.07.
On the brighter side, O’Shea believes that despite weak iPhone sales, “Apple’s iPhone business still looks sufficient to build a massive, high margin, high multiple Services business over time.”
Before Jefferies, many research firms—including Morgan Stanley, Goldman Sachs, UBS, and HSBC—cut their estimates for Apple over the last couple of months. Weak iPhone sales have been one of the most common reasons for analysts’ changing views on Apple, which have also hurt the stock lately.
In December so far, AAPL has lost 7.0% as of Tuesday’s closing. Other large US companies Alphabet (GOOG), Amazon (AMZN), NVIDIA (NVDA), Qualcomm (QCOM), and Microsoft (MSFT) were down 6.0%, 8.2%, 10.1%, 0.8%, and 6.2% month-to-date, respectively.