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Apple is falling after Bank of America downgraded the iPhone maker on signs of a slowdown in consumer spending

Apple is falling after Bank of America downgraded the iPhone maker on signs of a slowdown in consumer spending

Apple was downgraded to a neutral buy rating by Bank of America, contributing to a nearly 5% drop in the iPhone maker’s stock during Thursday’s session.

The investment bank also cut its price target by about 14% to $160 per share from $185.

“We view the slowdown in services and relatively lackluster delivery times for the iPhone as indicators that consumer spending will slow,” analysts led by Wamsi Mohan said in a research note.

Shares fell as much as 4.9% to $142.48, their lowest price since mid-July.

Shares were headed for a second straight decline, with Wednesday’s slide beginning after Bloomberg reported that Apple had scrapped plans to ramp up production of its new iPhone 14 this year as an expected surge in demand failed to take shape.


Apple shares were down roughly 16% year-to-date through Wednesday’s session. But the stock was seen as a relatively safe haven compared to the 29% decline in the S&P 500 information technology sector, BofA said.

BofA said risks to that outperformance next year include a weaker iPhone 14 cycle that points to softness in consumer spending, a weaker near-term services trajectory where the App Store and Google’s paid licensing may slow, and pressure from a stronger dollar.

“While Apple’s long-term outlook remains favorable, we see increasing risk to earnings and valuation in the near term,” Mohan wrote.

Fiscal 2023 earnings per share projections of $5.87 and revenue guidance of $379 billion were well below consensus estimates of $6.46 per share and $412 billion.

Risks to the upgrade include stronger iPhone Pro sales offsetting weaker regular iPhone sales and new services such as advertising that may more than offset slowdowns in other areas.

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