Apple Sinks After Wall Street Titan Pulls Magnificent 7 Stock From Conviction List

A leading financial analyst company has removed technology giant Apple Inc AAPL from its "Conviction List" one month after first-quarter earnings were reported.

What Happened: Apple has had several eventful months with the release of the iPhone 15 in September and the Vision Pro mixed reality headset in February.

Goldman Sachs Group GS removed Apple from its Conviction List, but notes that the stock remains Buy rated. The price target for Apple was $232 in the latest note from Goldman Sachs after first-quarter earnings.

"There are many reasons a stock could get removed from the list. The can include (but are not limited to), analysts no longer having conviction in their idea, price realization, the passage of catalysts or the subcommittee believing there are better opportunities elsewhere," the company said.

Given that Apple retains a Buy rating, it suggests that the analysts’ belief in the stock hasn’t waned. With Apple’s shares experiencing a 5% decline over the past month and a 6% decrease since the beginning of the year, it seems unlikely that the stock’s removal is due to price realization.

In this case, Apple being removed from the Conviction List likely came from the passage of catalysts and/or there being better opportunities elsewhere.

The release of the iPhone 15 and Vision Pro take away two catalysts for Apple along with the recent earnings report.

A report also linked Apple to ending its longstanding plans to launch an electric vehicle, which could be a negative for the company going forward.

Goldman Sachs analyst Michael Ng highlighted Apple's iPhone, gross margins and Services during the first quarter in an investor note after earnings.

"iPhone outperformed in the quarter driven by record upgrades and despite a MSD% (mid-single digit) yoy (year-over-year) decline in Mainland China iPhone revenue and increased competition in the region," Ng said.

Ng said the iPhone 15 was "resonating with consumers" and could foreshadow a strong iPhone 16.

The analyst also highlighted that Apple is investing in generative AI efforts and the company will share more efforts on that front later this year.

The removal by Goldman Sachs also comes as the financial company is seeking to end its partnership with the tech giant on the Apple Card.

Related Link: After Bidding Adieu To Goldman Sachs, Who Would Be Apple’s Ideal Partner? Mark Gurman Predicts Chase Bank

Why It's Important: Goldman Sachs' Conviction List includes 20 to 25 Buy-rated stocks that are among the best trading ideas each month.

Along with Apple being removed, Goldman Sachs also removed Merck & Co MRK and Vertex Pharmaceuticals VRTX from the Conviction List.

Replacing these three stocks were Amgen Inc AMGN, Monday.com MNDY and Vulcan Materials Company VMC.

Goldman Sachs has a $350 price target on Amgen and highlights the company's "robust pipeline of drugs in development." Analyst Salveen Richter said Amgen's pipeline will see many "key clinical trial read-outs in 2024."

Software company Monday.com has a $270 price target from Goldman Sachs. The report said the company's decelerating revenue growth is only a pause on its path to "a sustained highly profitable growth trajectory." Analyst Kash Rangan said there could be market share gains, new product introductions and pricing power for the company.

Goldman Sachs has a $292 price target on Vulcan Materials. The report said Vulcan could see earnings increase by around 50% over the next two years led by improving profitability, capital deployment opportunities and the company's exposure to U.S. homebuilding activity.

AAPL Price Action: Apple shares are down 1% to $179.54 on Friday versus a 52-week trading range of $147.33 to $199.62.

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