Barclays expects Apple to miss on production and demand weakness, cuts stock target

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By Senad Karaahmetovic

Barclays analysts lowered the price target on Apple (NASDAQ:AAPL) stock to $133 per share from the prior $144 to reflect "weakening demand."

In addition to well-telegraphed supply and production issues, the Cupertino-based titan is also experiencing weakening demand across its hardware categories, the analysts wrote in a note to clients today.

"We did another round of checks with China channel and supply chain partners in the last few days. What started out as production-driven cuts has moved to demand weakness across product categories."

Additionally, the analysts also see the risk from FQ1 consensus estimates for Apple's Services business. They estimate Services grew 2.5% year-over-year (YoY) while the consensus is looking for a 5% growth.

They also lowered revenue estimate by 7% and see Apple missing the average analyst estimate for the December quarter. The FQ1 EPS is also lowered, from $2.02 to $1.85, easily below the $1.98 consensus.

Barclays analysts also lowered estimates for FQ2, resulting in a slashed price target.

"At a 20% premium to the S&P 500, we see the stock as fairly valued at best. Manufacturing issues aside, we believe we are witnessing the catch-up from strong Covid performance across product categories. Service revenues have been decelerating as well. We see pressure to estimates and PE multiple in 2023."

"We continue to see balanced risk/reward at this time," the analysts conclude.