Barclays recently cut its Apple price target from $144 per share to $133 per share, noting it’s concerned that Apple Services estimates are “at risk.”
The firm lowered its revenue estimate by 7% for the quarter to account for slowing services growth, production problems and weakening demand.
“What started out as production driven cuts has moved to demand weakness across product categories,” they wrote in a Tuesday note. “We are also concerned by decelerating Services growth.”
Apple struggled with iPhone 14 Pro shipments during the holiday season because of Covid restrictions on its primary factory in China. Investors are also wary of rising interest rates and declining consumer confidence, which could hurt demand for Apple’s premium-priced products.
Shares of Apple were up less than 1% early Wednesday morning.
In October, the world’s biggest iPhone factory in Zhengzhou, China, was hit with a Covid outbreak. 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.
Foxconn has attempted to entice workers back with bonuses, and Reuters reported that Foxconn’s Zhengzhou factory is almost back to full production.
China has reversed course on its zero-Covid policy as it looks to reopen the economy. Beijing’s policy involved strict lockdowns and mass testing to try to control the virus. Now, there are Covid-19 outbreaks across large parts of the country, which could impact demand for iPhones.
Apple also faces potential demand issues.
“The key challenge is expected to be on the demand side, especially since resilient high-end consumers may have started to shift their spending to travel while some may have shifted their focus to medical supplies. The shift in spending will pose a key challenge in the short term,” Will Wong, research manager at IDC, told CNBC.
A representative from Apple did not immediately respond to a request for comment.
–CNBC’s Michael Bloom and Arjun Kharpal contributed to this report
