Why This Apple Analyst Is Downgrading The Stock As It Hits All-Time Highs

Shares of technology giant Apple Inc AAPL recently hit all-time highs. The stock soared heading into the company's WWDC event and the unveiling of the Vision Pro headset. But, one analyst is downgrading shares despite the momentum.

The Apple Analyst: UBS analyst David Vogt downgrades shares of Apple from Buy to Neutral and raises the price target from $180 to $190.

Related Link: Apple Q2 Earnings Thump Estimates Buoyed By Robust iPhone Sales, Record Services Revenue 

The Analyst Takeaways: Vogt calls the investment case for Apple an unfavorable risk/reward with a large premium to the market and soft demand trends, especially the iPhone.

“We are downgrading Apple shares to Neutral from Buy given persistent softness in developed markets and data that indicates growth is likely to remain under pressure,” Vogt said.

For the second half of 2023, Vogt sees iPhone unit growth down 1% to 2%.

The analyst said iPhone sales have seen strength in emerging markets, but the core markets of the U.S., China and Europe are seeing a sales decline.

“As such, we do not believe the unit TAM and growth outside of the three largest markets is large enough to drive long-term sustainable iPhone growth above mid-single digits.”

The analyst did grant the shares a modest boost in the price target, reflecting a 5% increase, but deemed it "insufficient" to warrant a Buy rating.

“We do not believe Apple shares offer a compelling risk/reward particularly in light of soft iPhone, PC, and App Store fundamentals over the next 6-12 months.”

The analyst said he does not expect autonomous vehicles or the Vision Pro headset to be material for Apple in the short term. The analyst has a target estimate of one million units sold for the Vision Pro in calendar year 2024.

AAPL Price Action: Apple shares are down 0.3% to $183.25 on Tuesday.

Read Next: Apple Earnings Call Takeaways: Emerging Market Strength, Guarded AI Approach, Muted Q3 Guidance 

Photo: Unsplash