After witnessing a decline in hardware sales in the third quarter of Fiscal 2023, Apple (NASDAQ:AAPL) may again disappoint with its Q4 numbers. Barclays analyst Tim Long believes that AAPL’s hardware sales could fall short of analysts’ expectations. Further, he views the consensus forecast for iPhone unit sales as overly optimistic.
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The analyst added that the supply chain tracker suggests a low-single-digit miss for Apple’s September quarter hardware revenue with shortfalls across iPhone units, Macs, and iPads. Long attributed the lower-than-expected hardware revenue to the weakness in demand in China and supply constraints. The analyst maintained a Hold rating on Apple stock on October 8, citing the weak demand environment and the extended replacement cycles.
It’s worth highlighting that iPhone sales fell 2% in the second quarter. Meanwhile, its Mac and iPad revenues declined by 7% and 20% in the June-end quarter. Moreover, the U.S. government’s antitrust trial involving Google is generating negative headlines for Apple. Citing the ongoing trial, Bernstein analyst Toni Sacconaghi warned that Apple might be hit hard if the court delivers an unfavorable verdict against Google.
As Apple faces short-term headwinds, let’s look at what the Street recommends for AAPL stock.
Is Apple a Buy, Sell, or Hold?
Given the short-term headwinds, analysts are cautiously optimistic about Apple stock. It has received 20 Buy and nine Sell recommendations for a Moderate Buy consensus rating.
Despite weak hardware sales, Apple stock has gained about 38% year-to-date. Moreover, analysts’ average price target of $207.69 implies 16.42% upside potential from current levels.
Bottom Line
The short-term concerns over product sales keep analysts cautiously optimistic about Apple stock. However, its installed base reached an all-time high across all geographic segments during the second quarter of Fiscal 2023, bringing significant growth opportunities to upsell and cross-sell its products. Moreover, its Services revenues remains strong, providing a solid platform for long-term growth.
