Investing.com — Jefferies analysts downgraded Apple inventory to Underperform from Maintain on Monday as they count on the tech large to overlook each earnings and steerage targets in its upcoming fiscal Q1 2025 report. The corporate’s shares fell round 1% in premarket buying and selling Tuesday.
Jefferies’ worth goal on Apple Inc (NASDAQ:) inventory was additionally lowered to $200.75 from $211.84, implying a 13% draw back from the final closing worth.
The bearish expectations come amid weak iPhone gross sales and a subdued outlook for iPhone 17 and 18 as a consequence of “slower AI uptake and commercialization,” analysts stated in a be aware.
They challenge 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 beneath consensus.
Jefferies has lowered their forecast for iPhone shipments from a 1% development to a 2% decline for the primary quarter of fiscal 12 months 2025, based mostly on knowledge indicating a roughly 4% year-over-year lower in iPhone shipments throughout this era, in line with the Worldwide Information Company (IDC).
The sell-through of iPhones in China throughout the identical quarter is reported to have dropped considerably, whereas worldwide markets would possibly see marginal development. Moreover, the outlook for different Apple merchandise corresponding to iPads and MacBooks is bleak as a result of total weak point within the client electronics market.
The downgrade of Apple inventory additionally displays considerations over the March quarter steerage, which analysts imagine might disappoint buyers. Regardless of optimism about demand in China as a consequence of authorities subsidies, new insurance policies will restrict these subsidies, successfully excluding most iPhone fashions.
“We additionally imagine demand for SE4 could also be weaker than anticipated, since it is going to seemingly 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 assume customers could be drawn to SE4 owing to Apple Intelligence, particularly in China,” they added.
Furthermore, Jefferies’ crew 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 notably helpful.
Business checks additionally elevate 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 big improve cycle pushed by AI.
“Even when iPhone has new type components within the subsequent 2 years, quantity development will seemingly be slower if AI takes longer to materialize,” analysts defined.
In gentle of those components, they’ve reduce its earnings per share (EPS) forecasts for Apple by 2% to 23% over the subsequent three years, with fiscal 12 months 2025 (FY25) and FY26 EPS estimates now roughly 4% beneath consensus.
