Jefferies analysts downgraded Apple stock to Underperform from Hold on Monday as they expect the tech giant to miss both earnings and guidance targets in its upcoming fiscal Q1 2025 report. The company's shares fell around 1% in premarket trading Tuesday.
Jefferies' price target on Apple Inc (NASDAQ:AAPL) stock was also reduced to $200.75 from $211.84, implying a 13% downside from the last closing price.
The bearish expectations come amid weak iPhone sales and a subdued outlook for iPhone 17 and 18 due to “slower AI uptake and commercialization,” analysts said in a note.
They project Apple to fall short of its revenue growth guidance of 5% for the first quarter and to guide to only low single-digit revenue growth in the second quarter, also below consensus.
Jefferies has reduced their forecast for iPhone shipments from a 1% growth to a 2% decline for the first quarter of fiscal year 2025, based on data indicating a roughly 4% year-over-year decrease in iPhone shipments during this period, according to the International Data Corporation (IDC).
The sell-through of iPhones in China during the same quarter is reported to have dropped significantly, while international markets might see marginal growth. Furthermore, the outlook for other Apple products such as iPads and MacBooks is bleak due to the overall weakness in the consumer electronics market.
The downgrade of Apple stock also reflects concerns over the March quarter guidance, which analysts believe could disappoint investors. Despite optimism about demand in China due to government subsidies, new policies will limit these subsidies, effectively excluding most iPhone models.