Barclays pessimistic on AAPL, predicting imminent Services slowdown

Posted:
in AAPL Investors
Barclays has started to cover Apple's stock once again, handled by a new managing director at the investment bank, but the initial view of the iPhone maker is dreary, landing it with a price target of $192 and an 'Equal Weight rating" based on 5G iPhone and Services pessimism.




Barclays analyst Tim Long's first investor note about Apple outlines the company's premiere devices as having gone past its peak, with current-generation models like the iPhone XS and iPhone XR being "relatively unsuccessful" in recapturing sales.

The situation may not necessarily be revised in the next quarter, Barclays suggests, doubting the September refresh to prompt existing iPhone owners to upgrade their devices in a major way. The push to 5G in 2020 may not even make a "meaningful difference" to sales, with Long also suggesting the average selling price for iPhone will also decline that year.

Acknowledging iPhone sales aren't the entire company's worth, Barclays also insists Apple's Services growth will slow down from its current state. While new services, like Apple TV+ and Apple Arcade, could be revenue generators, the pricing of the incoming services, as well as relatively young elements of the Services business will face increased pressure from competition, especially over pricing.

Apple's Services revenue growth over the last four years
Apple's Services revenue growth over the last four years


The trepidation on Services seems to go against what most other analysts are saying, with upcoming new services set to build upon the already strong Services base. In the latest quarterly results, Apple reported $11.5 billion in Services revenue, up 13% year-on-year, as well as accounting for 21% of Apple's overall revenue and 36% of gross margin dollars, and counts over 420 million paid subscriptions across all of its services.

In the note, Apple is given an "Equal Weight" rating, along with a price target of $192.00. The target is lower than the current price of Apple, which started the trading day at $200.20, recovering after the recent downturn caused by the ongoing US-China trade war and currency spat.

Long has been at Barclays for a relatively short time, having joined the investment bank in June 2019 as a managing director. Before the move Long spent ten years at BMO Capital Markets as a senior equity analyst covering communications technology, and had previously worked for Banc of America Securities, Credit Suisse AG, Merrill Lynch, and Bell Communications Research.

Comments

  • Reply 1 of 17
    jimh2jimh2 Posts: 159member
    They may just be upset the Barclay's Apple Card is kaput. The reality is that growth has to slow at some point. Big growth rates are easy when the base is low and getting from 1M to 2M is easier that getting from 10M to 20M and likewise from 20M to 40M. All are 100% growth rates. The analysts don't care if it takes you 2 years to go from 20M to 40M even if you are gaining 10M per year.

    There is no accountability of these so-called analysts as all they are is speculators. I don't have the time to do so, but a financial website showing how well or poorly they perform would be great to look at.
    JFC_PAspliff monkeyandrewj5790mike1StrangeDaysFileMakerFellerpslice
  • Reply 2 of 17
    Phobos7Phobos7 Posts: 19member
    There is no need for pessimism from any corner of the appleverse, not even surrounding 5G. When it comes to Apple, the idea of second guessing and making imaginary predictions can sometimes feel justified from a cautious perspective, however long it takes, I have learned through experience, patience is truly a virtue.
    Rayz2016cornchippslice
  • Reply 3 of 17
    flydogflydog Posts: 328member
    Curious that this comes after their partnership with Apple ended, and after they yanked rewards relating to Apple products from their credit cards. 
    JFC_PAandrewj5790DAalsethmike1StrangeDayshydrogenpslice
  • Reply 4 of 17
    I'm pessimistic on Barclays.
    JFC_PAandrewj5790king editor the gratecornchipStrangeDayshydrogenpslice
  • Reply 5 of 17
    SoliSoli Posts: 9,178member
    jimh2 said:
    They may just be upset the Barclay's Apple Card is kaput.
    That was my first thought.
    tomowaandrewj5790ombra2105mike1pslice
  • Reply 6 of 17
    Riiiiight. S’cuse me while I manipulate some stock. 
    DAalsethcornchipStrangeDaysFileMakerFellerpslice
  • Reply 7 of 17
    seanismorrisseanismorris Posts: 1,015member
    Riiiiight. S’cuse me while I manipulate some stock. 
    Barclays is now Irish (having fled Brexit) and Apple is “double Irish”.

    Still... It seems kind of foolish to bet against services growth, when Apple is bringing new services online.
    pslice
  • Reply 8 of 17
    iOS_Guy80iOS_Guy80 Posts: 195member
    Soli said:
    jimh2 said:
    They may just be upset the Barclay's Apple Card is kaput.
    That was my first thought.
    Sour grapes.
    mike1pslice
  • Reply 9 of 17
    tomowatomowa Posts: 2member
    Soli said:
    jimh2 said:
    They may just be upset the Barclay's Apple Card is kaput.
    That was my first thought.
    Mine too!
    I've had my Barclay Visa for 5 years. Use it for everyday bills, pay off monthly, and get a $50 Apple Reward Card each month. 
    I just opened a new Barclay card in my wife's name, so I could buy a new iMac and take 18 months interest free to pay for it. So they do have a purpose!
  • Reply 10 of 17
    rob53rob53 Posts: 2,074member
    Just checked and the market and AAPL are both up so Barclay's announcement hasn't made a dent in anything. Goes to show you sometimes trying to short a stock doesn't always work.

  • Reply 11 of 17
    AppleishAppleish Posts: 128member
    tomowa said:
    Soli said:
    jimh2 said:
    They may just be upset the Barclay's Apple Card is kaput.
    That was my first thought.
    Mine too!
    I've had my Barclay Visa for 5 years. Use it for everyday bills, pay off monthly, and get a $50 Apple Reward Card each month. 
    I just opened a new Barclay card in my wife's name, so I could buy a new iMac and take 18 months interest free to pay for it. So they do have a purpose!
    Barclays is ending the Apple Rewards program. 
  • Reply 12 of 17
    big kcbig kc Posts: 121member
    Apple up $3.25 at this moment. Obviously the investment community has either shrugged this off, or even reacted positively to it. What a joke these analysts are. Just a bunch of market manipulators.
  • Reply 13 of 17
    big kc said:
    Apple up $3.25 at this moment. Obviously the investment community has either shrugged this off, or even reacted positively to it. What a joke these analysts are. Just a bunch of market manipulators.
    The market is up across the board.  Apple is up 1.60% last I checked, whereas some of the other competitor stocks are up doubled that percent.  Percentage is more important to look at than dollar amount.  

    Some analysts may forecast this, but everyone in the market manipulates stock passively in one way or another.  The financial markets move with or without analysts in unpredictable ways.
  • Reply 14 of 17
    AppleExposedAppleExposed Posts: 1,376unconfirmed, member
    Barclays? Isn't that the company who's card Apple is dropping? LOL

    In other news:
    Ex-wife says ex-husbands new love is a witch!
    edited August 8 mike1Rayz2016StrangeDays
  • Reply 15 of 17
    FolioFolio Posts: 591member
    If Long is short, time will prove Long is wrong.
    montrosemacs
  • Reply 16 of 17
    SpamSandwichSpamSandwich Posts: 31,301member
    Oh, Apple analysts... Is there anything you folks can get right?
  • Reply 17 of 17
    Rayz2016Rayz2016 Posts: 4,716member
    Well, I’ve been pessimistic on Barclays since they attempted to take on Apple Pay with a sticker pasted to the back of your phone. 
    StrangeDaysstompypslice
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