Apple’s prediction for a quiet Christmas quarter helped the company’s shares trim losses on Friday, as the U.S. employment data raised expectations of a Federal Reserve halt to rate rises.
The stock (AAPL.O) had dropped more than 3% before the bell, and it was down 1.5% in early trade. If the losses continue, the most valuable company in the world is expected to lose $40 billion in market value.
On Thursday, the manufacturer of iPhones predicted lower-than-expected sales for the holiday quarter, which is typically its highest, citing a lackluster market for iPads and wearable technology.
The prognosis, which included predictions from Deloitte and the U.S. National Retail Federation that sticky inflation would cause sales to climb at the weakest rate in years during the crucial shopping season, stoked concerns about broader Christmas demand. The holiday quarter often sets the tone for Apple’s fiscal year, which runs through September. “Apple’s revenue growth has stalled over the past few quarters and appears likely to continue to stagnate over the next year,” stockbroker Bernstein stated.
However, data showing nonfarm payrolls increased less than anticipated in October gave the market some support and lifted equities generally on optimism that the Fed could halt its rate-tightening cycle.
LSEG data shows that at least 14 analysts lowered their price predictions for Apple, bringing the consensus price target down to $195. Apple is now one of the least expensive “Magnificent Seven” stocks, trading over 26 times its 12-month forward profit expectations.
Tom Forte, an analyst at D.A. Davidson, stated, “We view management’s flat sales guidance as proof the company cannot rely on iPhone sales to drive shares higher, as it has in the past.” Sales of Apple’s primary source of income, the iPhone, increased in the September quarter and are expected to continue rising in the last three months of 2023.
Additionally, to calm Wall Street’s concerns that Apple was losing market share to a resurgent Huawei and other regional smartphone vendors, CEO Tim Cook emphasized that the iPhone 15 models were performing well in China. “In mainland China, we set a quarterly record for the September quarter for iPhone,” Cook stated to Reuters.
Several analysts applauded the comments. The market will be relieved on this front, according to Dan Ives, an analyst at Wedbush Securities.
