Investing.com — Jefferies analysts downgraded Apple (NASDAQ:) inventory to Underperform from Maintain on Monday as they count on the tech big to overlook each earnings and steerage targets in its upcoming fiscal Q1 2025 report. Their worth goal on Apple inventory was additionally decreased to $200.75 from $211.84, implying a 13% draw back from the present ranges.
The bearish expectations come amid weak iPhone gross sales and a subdued outlook for iPhone 17 and 18 on account of “slower AI uptake and commercialization,” analysts mentioned in a be aware.
They venture Apple to fall in need of its income development steerage of 5% for the primary quarter and to information to solely low single-digit income development within the second quarter, additionally under consensus.
Jefferies has decreased their forecast for iPhone shipments from a 1% development to a 2% decline for the primary quarter of fiscal yr 2025, based mostly on information indicating a roughly 4% year-over-year lower in iPhone shipments throughout this era, in keeping with the Worldwide Knowledge Company (IDC).
The sell-through of iPhones in China throughout the identical quarter is reported to have dropped considerably, whereas worldwide markets may see marginal development. Moreover, the outlook for different Apple merchandise corresponding to iPads and MacBooks is bleak because of the general weak spot within the client electronics market.
The downgrade additionally displays issues over the March quarter steerage, which analysts consider might disappoint traders. Regardless of optimism about demand in China on account of authorities subsidies, new insurance policies will restrict these subsidies, successfully excluding most iPhone fashions.
“We additionally consider demand for SE4 could also be weaker than anticipated, since it’ll possible compete not a lot with Android or iPhone 14/15, however used iPhone 13/14 P/PM,” analysts led by Edison Lee famous.
“We don’t suppose customers can be interested in SE4 owing to Apple Intelligence, particularly in China,” they added.
Furthermore, Jefferies’ workforce means that the near-term outlook for AI in smartphones is subdued, as a third-party survey signifies that US customers don’t discover smartphone AI significantly helpful.
Trade checks additionally increase the opportunity of delays in Apple’s superior packaging roadmap, which is essential for enhancing AI capabilities on the iPhone. This uncertainty is attributed to slower AI monetization, which might dampen expectations for a major improve cycle pushed by AI.
“Even when iPhone has new kind components within the subsequent 2 years, quantity development will possible be slower if AI takes longer to materialize,” analysts defined.
In mild of those components, they’ve minimize its earnings per share (EPS) forecasts for Apple by 2% to 23% over the subsequent three years, with fiscal yr 2025 (FY25) and FY26 EPS estimates now roughly 4% under consensus.
