Apple’s prediction for a quiet Christmas quarter helped the company’s shares trim losses on Friday, as the U.S. employment data raised expectations of a Federal Reserve halt to rate rises.
The stock (AAPL.O) had dropped more than 3% before to the bell, and it was down 1.5% in early trade. The most valuable company in the world was projected to lose $40 billion in market value if the losses continue.
The iPhone maker on Thursday forecast sales for the holiday quarter, usually its biggest, below Wall Street estimates, blaming weak demand for iPads and wearables.
Fears about broader Christmas demand were stoked by the prognosis, which included predictions from Deloitte and the U.S. National Retail Federation that sticky inflation would cause sales to climb at the weakest rate in years during the critical shopping season.
“Apple’s revenue growth has stalled over the past few quarters – and appears likely to continue to stagnate over the next year,” said brokerage Bernstein, noting the holiday quarter usually sets the tone for Apple’s fiscal year that runs until September.
However, data showing nonfarm payrolls increased less than anticipated in October gave the market some support and lifted equities generally on optimism that the Fed could halt its rate-tightening cycle.
LSEG data shows that at least 14 analysts lowered their price predictions for Apple, bringing the consensus price target down to $195. Apple is now one of the least expensive of the so-called “Magnificent Seven” stocks, trading at over 26 times its 12-month forward profit expectations.
“We view management’s flat sales guidance as proof the company cannot rely on iPhone sales to drive shares higher, as it has in the past,” D.A. Davidson analyst Tom Forte said.
The iPhone, Apple’s main revenue generator, saw its sales rise in the September quarter and is also forecast to post an increase in the last three months of 2023.
Additionally, in an effort to calm Wall Street’s concerns that Apple was losing market share to a resurgent Huawei and other regional smartphone vendors, CEO Tim Cook emphasized that the iPhone 15 models were performing well in China. “In mainland China, we set a quarterly record for the September quarter for iPhone,” Cook stated to Reuters.
A number of analysts applauded the comments. The Street will be relieved on this front, according to Dan Ives, an analyst at Wedbush Securities.
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