Analysts at Bank of America Merrill Lynch have downgraded Apple stock to neutral, lowering the price target from $142 to $130. The analysts cited several short-term pressures on the stock as the reasoning behind the move.
Apple is still a solid company and should deliver on its product pipeline, but its stock simply isn’t providing the best balance of risk to reward, according to a memo by the analysts obtained by Bloomberg. Bank of America is anticipating shares to be hurt by a variety of factors in the immediate future, among them decelerating iPhone sales and slower gains in China.
Bloomberg notes that the firm listed six key reasons it expects pressure on shares in the short term:
- iPhone deceleration
- A slowdown in China marketshare gains
- A deceleration in gross dollar profit growth, which is correlated to stock price
- A decline in the magnitude of earnings beats
- Only modest improvement to the iPhone coming
- Low likelihood of more capital return plans
Also in the mix is the upcoming “s” fall upgrade to the flagship iPhone 6 lineup. The upcoming “iPhone 6s,” and “iPhone 6s Plus” are expected to boast only modest internal improvements over the current lineup, while basically maintaining their outward appearance.
Apple share prices have been on a downward trend in recent weeks, falling from around $133 in mid-July to $114.64 at the end of trading on Tuesday. The company has also been a drag on the weighted average of the Dow Jones Industrials for months.
While Bank of America may have downgraded Apple stock, other investment analysts have continued to keep their targets high for the iPhone-maker, with RBC Capital Markets earlier this week keeping their target for the stock at $150.