Apple's shares closed at $114.64 yesterday, basically where they started the year despite rising to $134 in April. Undoubtedly, the company is going through tough times...
Much of the loss has come in the past few weeks, with the stock falling through its 200-day moving average and entering a correction.
Bank
of America analysts Wamsi Mohan, Ruplu Bhattacharya, and Param Singh released a note downgrading shares to neutral and slashing their price
target from $142 to $130.
Analysts were convincing saying that the company is still good and many expect further achievements in the future. However, the stock is not currently providing the best risk to reward ratio, they said.
They highlighted six essential reasons it expects pressure
on shares in the short term:
1) iPhone deceleration;
2) a slowdown in
China marketshare gains;
3) a deceleration in gross dollar profit growth,
which is correlated to stock price;
4) a dip in the magnitude of
earnings beats;
5) just modest improvement to the iPhone coming;
6) weak likelihood of more capital return plans.
One argument against the downgrading may be that Apple's valuations are quite appealing in comparison with its peers. Despite this, Bank of America's analysts say that it is sticking with its call due to Apple's past performance.
