Shares of Apple (NASDAQ:AAPL) declined by more than 4% during the first week of trading in 2024 following a downgrade by Barclays, which pointed to reduced demand for the iPhone 15.
The decline extended by an additional 1% in pre-market trading on Thursday after Piper Sandler analysts also downgraded Apple’s rating. Their assessment revealed a weaker general market for smartphones in the first half of 2024.
Piper Sandler’s analysts expressed concerns about smartphone inventory levels going into the first half of 2024 and suggested that sales growth rates for these devices might have reached their peak. Smartphones constitute approximately 51% of Apple’s total revenue.
Furthermore, the analysts noted the challenging economic conditions in China, which they believe could negatively impact the smartphone sector.
Investor sentiment might also be affected by unfavorable developments related to the Apple Watch and various ongoing legal issues.
The analysts observed that difficult comparisons with 2023, along with persistent currency challenges and high interest rates, are likely to continue affecting Apple’s performance in the first half of 2024.
Additionally, the analysts pointed out Apple’s high valuation, with its near-term price-to-earnings ratio standing at around 29 times, higher than the five-year average of 24 times.