Apple Stock Gets a Rare Downgrade. Here’s Why.

Apple stock is down 3.2% to $185.06 following the company’s slightly disappointing financial results for its fiscal third quarter. Revenue in the quarter was down 1% from a year ago—the third straight quarterly decline—and Apple projected similar performance for the September quarter, disappointing investors who had been anticipating a return to growth.

With today’s decline, Apple stock appears likely to close below the $3 trillion valuation mark for the first time since early July. 

Crockett simply doesn’t see a lot of reasons to buy the stock here, with no growth and the stock trading at near-record valuation levels.

“Apple makes the most important device of the modern economy—the iPhone—has executed an impressive upgrade to Macs with the pivot to Apple Silicon, and is reaccelerating services,” he writes. “But a slowdown in the U.S. seems likely to last until a material new product category takes hold. And that is uncertain both in timing and success, leaving little reason to favor shares now trading near peak absolute and relative multiples.”

In the quarter, iPhone sales were $39.7 billion, down 2.4%. Mac sales were $6.8 billion, down 7.3% from a year earlier. iPad sales were $5.8 billion, down 19.8%. Sales in the wearables, home, and accessories segment were $8.3 billion, up 2.4%, while services revenue grew 8.2%, providing the primary offset to the weakness in hardware sales. 

Sales in the Americas region were down 5.5%, a decline CEO Tim Cook blamed on a soft market for smartphones—the third straight quarter of declining sales in the region. Crockett contends that even with strength in emerging markets, Apple shares will be challenged to rally without an improvement in sales in the Americas.

Write to Eric J. Savitz at [email protected]