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Apple (AAPL, Financial) shares tumbled more than 4% on Tuesday after analysts across the board downgraded the stock, citing mounting worries about sagging iPhone sales and lackluster performance in hardware and services.
Apple was downgraded to underperform from hold by Jefferies analyst Edison Lee, who cut his price target to $200.75 from $211.84. However, Lee said the downgrade reflected weakening demand for the iPhone, particularly in major foreign markets such as China. However, efforts to boost sales with new models, such as the budget-friendly iPhone SE, have not really gotten buy-in in an increasingly crowded smartphone market, which has raised doubts about revenue growth.
Last week, Barclays also downgraded Apple to an underweight from an equal weight rating, warning of poor iPhone 15 sales and anticipating more of the same with the iPhone 16. It also long condemned Apple's product lineup as not innovative enough, which, he said, had dulled consumer interest and buying momentum.
Apple's hardware business, of course, extends beyond smartphones, and it also has headwinds. Declining sales of MacBooks and iPads were also a long pointer to bigger problems in the company's hardware arm, a historically lucrative revenue generator.
Growing skepticism of Apple's ability to keep its growth well intact in the face of changing market conditions led to these downgrades. Meanwhile, analysts remain wary of Apple's near-term performance as it grapples with intensifying competition and economic pressures, a selling factor in recent weakness.
This article first appeared on GuruFocus.