Apple Faces Macro Challenges, But UBS Remains Bullish On Cupertino's 'Long-Term Opportunity'

The uncertainty roiling economies in the wake of a spreading virus and concerns about an overall downturn give UBS short-term worries about Apple Inc. AAPL, but not enough to drop the sell-side firm's buy recommendation in light of expectations for continued long-term growth. 

Investors were also starting to show some unease on Friday, with Apple's stock off by about 3%. 

The Apple Analyst

UBS analyst Timothy Arcuri maintained a Buy rating on Apple with a $355 price target. 

The Apple Takeaway

Apple is taking a hit on two sides of the world, with the coronavirus issue hurting demand in China and worries about an economic downturn returning in the United States, Arcuri said in a Friday note. (See his track record here.) 

"We remain cautious in the near-term — particularly on the demand side if the US suddenly goes into a multi-quarter recession," the analyst said in a Friday note. 

Arcuri expects demand to remain weak in China, with expectations that a return to normal buying patterns will take time after the coronavirus threat.

The analyst projects that monthly smartphone data will be weaker in February and March, even compared to January, which saw a 28% year-over-year decline.

Citing the increasing risk of lower near-term demand, Arcuri lowered June quarter forecasts for Apple but kept longer-term estimates, as well as the price target and overall long-term outlook, unchanged.

"We see near-term uncertainty but long-term opportunities from 5G and foldable phones, Wearables growth given low attach-rate, and traction of new services are unchanged."

AAPL Price Action

Apple shares were down 2.92% at $284.36 at the time of publication Friday. 

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