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Wall Street Experts Advise Caution for Apple Inc Investors

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Apple Inc. is apparently eliciting fear in the hearts of Wall Street experts. Though the iPhone maker’s stock price has been continuing its upward trend, analysts are starting to downgrade their target price for its shares. Investment bank Goldman Sachs took the initiative and cut its 12-month price target for the stock below most estimates on the Street. Photo Credit: Shutterstock

By: Hadassa Kalatizadeh

Apple Inc. is apparently eliciting fear in the hearts of Wall Street experts. Though the iPhone maker’s stock price has been continuing its upward trend, analysts are starting to downgrade their target price for its shares. Investment bank Goldman Sachs took the initiative and cut its 12-month price target for the stock below most estimates on the Street. Goldman analyst Rod Hall cut his target from $187 to $165, which is 26 percent below the share price as of Thursday. Goldman said that the company’s one-year free trial period for the TV+ service would have a “material negative impact” on earnings, and would present lower hardware profit margins. He feels the company is poised to lose more than 25 percent of its share price over the year. Of late the analyst consensus on Apple has been a Moderate Buy, with an average price target of $224.76.

As reported by Bloomberg News, while many investment firms are cautiously downgrading Apple, there are only a few companies to have a lower target than Goldman’s. Currently, the consensus rating for Apple is at 3.76 out of 5, which is the lowest it has been since the first half of 2004. New Street Research was among those to lower its price target for Apple last week, warning of a “multi-year decline” in demand for iPhone products. Rosenblatt downgraded the shares back in July, leading to the most sell ratings for the company since at least 1997, as per Bloomberg’s study of historical data. Since January, the number of investment firms with buy rating for Apple Inc plummeted below 50 percent, for the first time since 2004. The tech manufacturer now also has five sell ratings, as of this year.

The tech company, founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne, closed at 218.75 on Friday afternoon, down almost 2 percent, but having bounced back from a 2.6 percent dip during the day. The stock has a one-year high price of $233.47 and a one-year low of $142, with an average volume of 25.65M. The share price is up over 13 percent from an August low, and is currently only 6% below its record high. At this price, Apple Inc.’s valuation is above $1 trillion.

In response, Apple Inc said in a statement to CNBC, “We do not expect the introduction of Apple TV+, including the accounting treatment for the service, to have a material impact on our financial results.”

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