US tech giant Apple, the largest company in the world by market capitalization, is beginning to see some investors lose confidence. Although the company’s finances remain incredibly strong, some analysts are concerned that Apple’s massive growth over the past decade has led to an overvalued share price. Over the past year, the Silicon Valley giant has seen its stock price fall over 20 percent. Now some commentators believe Apple’s stock price won’t recover until next year.
Late last week, Tavis McCourt, an analyst at Raymond James, decreased the firm’s forecast for Apple. Although the iPhone maker still enjoys substantial profits, many analysts believe the popularity of Apple’s products is waning. For the first time in 13-years, Apple reported a fall in quarterly revenue earlier in the year. Although the decline was not major, it did send a shock to some investors considering Apple impressive performance over the past decade. Raymond James is not the first Wall St firm to downgrade earnings forecasts for Apple. Wall St major Citigroup also decreased its expectations over Apple’s future earning potential.
A multitude of factors have led analysts to downgrade Apple’s future earnings predictions. While the company still enjoys healthy smartphone sales, recently sales of its iPhone have stagnated. Global competitors, especially those from Samsung and various Chinese firms, have edged out Apple products by offering cheaper smartphones. At the same time, Apple has continually pushed back its upgrade cycle and has often failed to impress consumers who specifically look for hardware upgrades. This, combined with the struggling global economy, has led many global consumers to move away from expensive Apple products.
But not all hope it lost for the tech giant. While the company’s iPhone is expected to have either lower sales growth or even stagnant growth, it is still supposed to bring in major profit for the firm. At the same time, other Apple products still enjoy healthy sales, while Apple is planning on multiple new product launches soon. Analysts are awaiting future announcements from Apple for an indication on when to raise forecasts again. Although various institutions have downgraded Apple forecast, the overall trend of the stock remains bullish, with average price targets indicating a 27 percent gain over the next 12-months.