Since the end of February this year, Apple Inc. (AAPL, +0.44%) has lost more than $100 billion in valuation. To add to the downhill trend, analysts still believe that the shares will continue to decline.
According to Wamsi Mohan, an analyst at the Bank of America Merrill Lynch, Apple is likely to be negatively impacted in the near term as a result of a decline in iPhone growth. In addition, the tech giant is likely to also be plagued by tough comparisons year over year while new products such as Apple Pay, Apple Music and the Apple Watch will still take some time before they contribute to the growth of the company.
In addition, Mohan also lowered his price target from $142 to $130 and he downgraded the stock from buy to neutral.
This downgrade marked the second Apple has received since it reported earnings at the end of July.
The first stab occurred two weeks ago when Cowen cut its price target on the Apple stock from $140 to $130 while also downgrading the stock from outperform to perform. At the time, Cowen cited concerns regarding a decrease in demand in China which recently became Apple’s largest iPhone market.
Another stab at Apple also came on Wednesday when Trip Chowdhry, an analyst at Global, reduced its estimates on revenue from China while also lowering his price target on the stock from $176 to $155.
In recent trade, the shares of Apple rose 1 percent to trade at $115.92. On Tuesday, the stock fell 3.2 percent to reach its lowest level since the 27th of January. In addition, this marked the fifth day of losses for the tech stock.
On the upside, analysts do believe that Apple has potential for the long term. However, they are also concerned that tough year-over-year comparisons as well as high expectations will negatively impact the share price.
As Mohan explained, the “magnitude of the beats” that Apple has become well known for are starting to fade. In addition, the stock price of Apple is correlated to gross profit U.S. dollar growth (USD) and this is also expected to “decelerate significantly” over the next few years.
Mohan went on to explain that while the latest iPhone 6S model will be unveiled in September, this is not expected to be “compelling enough” in order to boost the share price.
When Tim Cook, the CEO of Apple, was asked regarding Apple’s dependency on China, he stated that the company is currently not looking at changing their strategy in the country and that Apple is hoping to open its 40th store in China by June next year. In the latest quarter, Apple reported almost double revenue of Greater China at $13 billion. This came in response to an increase of 87% in sales as a result of iPhone unit growth.
MT4 Chart: Apple