Rosenblatt Analyst Downgrades Apple to Hold, Citing Slowdown Phase

Rosenblatt's Barton Crockett downgraded their rating on Apple (NASDAQ: AAPL) from Strong Buy to Hold on August 4, 2023. The analyst also maintained a $198 price target.

The downgrade was motivated by Apple's "mixed" results in their Q3 2023 earnings report, which highlighted the company's current slowdown phase. Crockett cautioned that Apple's growth in the U.S. will remain sluggish until a significant new product category takes hold. The analyst concluded that any acceleration in growth is uncertain in both timing and success, providing little reason to own the shares.

In their Q3 2023 report, Apple reported earnings per share (EPS) of $1.26, beating the Zacks Consensus Estimate of $1.19 and showing a 5% increase compared to Q3 2022. However, the company's revenue of $81.8 billion was roughly in line with the Zacks Consensus Estimate and missed Q3 2022's revenue by 1%.

Looking ahead, Apple's management guided for Q4 2023 to have revenue performance similar to Q3, with a gross margin of 44% to 45% and operating expenses ranging from $13.5 billion to $13.7 billion. CEO Tim Cook highlighted the company's record revenue in Services during Q3, driven by over 1 billion paid subscriptions, as well as robust sales of the iPhone in emerging markets.

Following Crockett's rating downgrade, other analysts also updated their ratings on AAPL on August 4, 2023. Tim Long of Barclays raised their price target by 12.1% to $149 and maintained a Hold rating on the stock. Erik Woodring of Morgan Stanley lowered their price target by 2.3% to $220 but maintained a Strong Buy rating. Srini Pajjuri of Raymond James raised their price target by 11.1% to $180 and maintained a Buy rating.

Currently, 75% of top-rated analysts rate AAPL as a Strong Buy or Buy, while 20.8% see it as a Hold. Only 4.2% of analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that AAPL's upcoming year will deliver earnings per share (EPS) of $6.32, signaling a 5.7% increase on a year-over-year basis.

Since Apple's latest quarterly report on August 3, 2023, the stock price has declined by 4.8%. However, year-over-year, the stock is up 9.8%. During this period, AAPL has outpaced the S&P 500, which has risen by 7.9%.

It's worth noting that Rosenblatt analyst Barton Crockett is ranked in the bottom 16% of Wall Street analysts by WallStreetZen. They have an average return of -0.6% and a win rate of 47.5%. Crockett specializes in the Communication Services, Consumer Cyclical, and Technology sectors.

Apple Inc. is a global company that designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories. The company also offers various related services, including AppleCare support, cloud services, and operating platforms like the App Store. Apple serves consumers, small and mid-sized businesses, as well as the education, enterprise, and government markets. The company distributes its products through retail and online stores, as well as through third-party cellular network carriers, wholesalers, retailers, and resellers. Apple Inc. was incorporated in 1977 and is headquartered in Cupertino, California.

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