Apple Stock Fell Last Week, Analysts Say This Is The Perfect Opportunity To Buy

Apple Inc. AAPL, the largest company in the world in terms of market cap, is expected to witness a slowdown in sales in the near term as the world braces for an economic slowdown. The stock plunged by 45 basis points over the past five days, reflecting jitters among investors regarding the company's near-term prospects. 

The company's revenue has declined for four consecutive quarters as of Sept. 30, reflecting the longest sales slowdown in the two decades since 2001. Increasing headwinds from China have been one of the major drivers behind Apple's lagging sales, as the Greater China region — China, Hong Kong and Taiwan — accounts for 18% of the tech giant's revenue. 

"Sentiment has turned more challenging for shares of Apple in recent days with increasing concerns around the lower demand for the iPhone 13 Series in China, as well as lackluster consumer spending momentum globally," JPMorgan analyst Samik Chatterjee said. 

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Apple's Crisis In The East 

Apple's recent worries stem from declining market share in China, its second-largest market. Amid rising tensions between the U.S. and China, Chinese officials banned government employees from using iPhones. As the Chinese government cracks down on the use of Apple products, a similar ban could be put in place by state companies and government-backed agencies. This could cause iPhone sales to drop by nearly 5%, according to Bernstein analyst Toni Sacconaghi.

"Perhaps more importantly, restricted use of iPhones among government employees could negatively impact sales among consumers (related family members; general populace) and could be part of a broader move by the Chinese government to promote usage of domestic technology," Sacconaghi stated.

Apple has also been facing tremendous competition from domestic tech giants including Huawei Technologies Co. Ltd. and Xiaomi. During the Singles Day event in China on Nov. 11, Apple's sales fell by approximately 4% year over year during the two-week period from Oct. 30 to Nov. 12, while Huawei and Xiaomi recorded a 66% and 28% rise year-over-year sales, respectively. 

"With Huawei's unexpected launch of Mate 60 Pro and Chinese government's ban of using foreign phones for government workers, iPhone market share in China has been a big concern for investors," Citi analyst Atif Malik said. 

Rising competition is expected to be a major headwind for Apple in the near term. 

Value Pick 

The dip in Apple stock might be the perfect opportunity to buy it, as the company expects its financials to remain robust despite the sluggish economic backdrop. In the fourth quarter, the tech behemoth generated all-time record services revenue. Sales of iPhone 15 also set a new quarterly company record for the period ended Sept. 30. 

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"If you look at iPhone 15 for that period of time and compare it to iPhone 14 for the same time in the year-ago quarter, iPhone 15 did better than iPhone 14," Apple CEO said. "I think the Mac is going to have a significantly better quarter in the December quarter. We've got the M3, we've got the new products, and we don't have the compare phenomenon on a year-over-year basis." 

The consensus earnings per share (EPS) estimate of $2.10 for the fiscal 2024 first quarter (ending December) indicates an 11.5% year-over-year improvement.

The company also has an impressive product lineup with several highly anticipated launches in the pipeline. Tech experts have also labeled Huawei's chipset on its latest Mate 60 series to be outdated compared to Apple's M2 and M3 chips, which could cause the current decline in sales to be temporary. 

Wedbush Securities has an Overweight rating on Apple stock with a price target of $240, reflecting a potential upside of over 25%. Morgan Stanley has an Outperform rating on the stock with a price target of $210, indicating a potential upside of over 10%. 

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