Apple stock target cut on pessimistic hardware revenue outlook

Apple Inc.’s stock price target was lowered at KeyBanc Capital on Tuesday below the average target on Wall Street, amid signs suggesting that third-quarter hardware tax revenue will fall even more than what is expected. is already planned.

The action of the technology giant AAPL,
+0.54%
nailed down 0.3% in premarket trading. On Monday, the stock fell 1.5% to end a five-day winning streak in which it rebounded 7.5%.

KeyBanc analyst Brandon Nispel maintained the overweight rating for Apple shares, but cut the price target to $173 from $191. Nispel’s new target is 5.8% below the average of 43 analysts polled by FactSet of $183.69, but still implies a 19.4% upside from Monday’s closing price of $144.87 .

Nispel said Key First Look Data (KFLD), which is spending more than 1.8 million KeyBanc credit and debit card customers in the United States, showed “indexed spend” in June had decreased by 4% from May, compared to the previous month – three-year monthly average growth of 5%. This extended the streak of monthly spending declines to three months, the longest such streak since the start of the COVID-19 pandemic in the first quarter of 2020.

For the second calendar quarter, which is the same as Apple’s fiscal third quarter, Nispel said the KFLD showed escalation spending was down 18% from the first quarter, compared to average. over the previous three years by 12%.

“For the quarter, the data tells us that we should expect much worse than historical growth for hardware in the next quarter,” Nispel wrote in a note to clients.

Apple is expected to release its third-quarter results on July 28, after the closing bell.

Nispel said Apple’s third-quarter computer hardware revenue is down 6.0% quarter-over-quarter, while current Wall Street consensus calls for a 19% drop.

“In other words, the consensus expects a quarter of weak growth, although we see some factors that were not anticipated that could cause earnings to fall below consensus,” Nispel wrote.

It lowered its hardware revenue estimate, not only to reflect general hardware weakness, but in particular for Apple’s Mac sales.

Nispel’s total revenue forecast for the fiscal third quarter was cut to $80.73 billion, down from $84.64 billion, from the current FactSet consensus of $82.44 billion.

Apple’s stock fell 13.6% in the three months to Monday, while exchange-traded fund SPDR Technology Select Sector XLK,
-0.98%
lost 11.4% and the Dow Jones Industrial Average DJIA,
+0.08%
fell 8.9%.