Shares of Apple were falling Thursday after the iPhone maker received its second downgrade this week.
The stock was down 1.2% to $181.96. The stock has fallen 5.5% this year. The shares have gained 46% over the past 12 months.
Piper Sandler analysts Harsh Kumar and Robert Aguanno downgraded Apple to Neutral from Overweight and cut their price target on the shares to $205 from $220 in a wider semiconductors industry report Thursday.
“We believe that first half of 2024 will be challenging for the analog market, handset and consumer end markets,” the analysts wrote. “However, we are expecting the GPU accelerator and Generative Artificial Intelligence driven compute markets to perform remarkably well throughout calendar year 2024.”
The analysts said there were a few reasons for the downgrade, most of which focused on the iPhone. Piper Sandler said it was concerned about inventory levels stepping into the first half of the year, worries that “growth rates have peaked for unit sales” and a weakening macroeconomic environment in China.
Aside from the iPhone, negative headlines around the Apple Watch and other legal challenges “could be a distraction,” the Piper Sandler analysts added. At the end of last year, a patent battle temporarily paused sales of two versions of the Apple Watch.
The stock’s valuation level also is higher than it has been in the past, the analysts noted, with shares trading at a neat-term price-to-earnings ratio of 29 times, compared with a five-year historical average ratio of about 24 times.
Some of these issues also drew the attention of Barclays analyst Tim Long, who lowered his rating on the shares to Underweight from Equal Weight and trimmed his price target to $160 from $161 on Tuesday.
All of that said, the majority of analysts have remained bullish on the stock, with 61% rating it Buy, according to FactSet.
Write to Emily Dattilo at emily.dattilo@dowjones.com