Barclays Reduces Apple Price Forecast Due to Demand Struggles and Slowing Services Expansion

‍Apple struggled to ship the iPhone 14 Pro during the holiday season due to Covid restrictions on its primary factory in China. Investors are also concerned about rising interest rates and declining consumer confidence, which could hurt demand for Apple's premium-priced products.

January 11, 2023

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Barclays has lowered its price target for Apple from $144 to $133 per share, citing concerns that estimates for Apple Services are at risk.

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The company has revised its revenue forecast downward by 7% for the quarter due to slowing growth in services, production issues, and weakening demand.
"What began as production-driven cuts has now shifted to weak demand across various product categories," analysts wrote in a Tuesday note. "We are also concerned by the slowing growth of services."

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Apple struggled to ship the iPhone 14 Pro during the holiday season due to Covid restrictions on its primary factory in China. Investors are also concerned about rising interest rates and declining consumer confidence, which could hurt demand for Apple's premium-priced products.
Apple shares were up slightly in early morning trading on Wednesday.

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In October, a Covid outbreak hit the world’s biggest iPhone factory in Zhengzhou, China. The Taiwanese company Foxconn, which runs the plant, imposed lockdown restrictions. The factory was later rocked by worker protests over a pay dispute in November, and many employees walked out.

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Foxconn has attempted to lure workers back with bonuses, and Reuters reported that the company's Zhengzhou factory is almost back to full production.
China has changed its policy on Covid-19, now opting for a more relaxed approach in order to reopen the economy. Beijing had previously employed strict lockdowns and mass testing in an attempt to control the virus, but this has not been successful in preventing outbreaks across the country. This could have a negative impact on demand for iPhones.

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Will Wong, research manager at IDC, told CNBC that the key challenge is expected to be on the demand side. He said that resilient high-end consumers may have started to shift their spending to travel while some may have shifted their focus to medical supplies. This shift in spending will pose a key challenge in the short term.
Apple did not immediately respond to a request for comment.