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Highlights:
- Apple shares dropped 1.5% in premarket trading following a downgrade from Jefferies.
- Concerns arose due to overestimated expectations for future iPhone models and reliance on iPhone sales.
- Jefferies analysts set a price target of $212.92, indicating a potential downside.
Apple Shares Decline After Downgrade
Apple (NEO:AAPL), a dominant player in the technology sector, witnessed a 1.5% decrease in premarket trading on Monday. This followed a decision by Jefferies to downgrade the stock from a "Buy" to a "Hold" rating. The investment bank also issued a price target of $212.92, signaling a possible decline of around 6% compared to the stock’s last closing price.
Concerns Over Future iPhone Sales
One of the main reasons behind the downgrade lies in concerns about Apple's upcoming iPhone models, specifically the iPhone 16 and 17. Analysts at Jefferies pointed out that market expectations for these devices may be too high, which could lead to future disappointments in sales. This overreliance on a single product line, which represented 52% of Apple's revenue for fiscal year 2023, is seen as a vulnerability. Apple's dependency on iPhone sales makes the company more susceptible to any fluctuations in the smartphone market, which can be impacted by economic conditions or shifts in consumer preferences.
Jefferies' Price Target Suggests Caution
Jefferies' revised price target of $212.92 reflects a cautious outlook. Although Apple continues to dominate the tech space, analysts suggest that the current valuation may already reflect most of the positive sentiment surrounding the company. As a result, they believe the stock could experience a downward adjustment, especially if iPhone sales do not meet heightened market expectations.
This development highlights the challenges that companies in the technology sector may face when they become too dependent on a single revenue stream.
