appleThe company was downgraded by at least two agencies on Friday after quarterly results heightened investor concerns about tariffs and its growth potential. Jefferies downgraded the stock to "underperform," becoming one of the rare institutions to be bearish on the iPhone maker. Analyst Edison Lee wrote that while results were in line with expectations, "the impact of tariffs will expand over time, further depressing corporate earnings expectations."
Apple's financial report showed that some of its sales fell short of expectations and it predicted that tariffs would increase the company's current quarter costs by $900 million. The company also expects year-over-year revenue growth in the current quarter to be in the "low to mid-single-digit" percentage range.
Rosenblatt Securities analyst Barton Crockett downgraded the stock to "neutral" from "buy."
He wrote: "What we have in front of us is a well-run company with acceptable but sluggish growth that is in desperate need of an exciting new product to revive growth. At the same time, its valuation is high and it operates in a volatile tariff and regulatory environment."
Crockett added that the earnings report highlighted Apple's "excellence in supply chain skills and that iPhone demand is better than many feared." However, for the stock to perform better than current levels, "there will need to be a strong acceleration in iPhone sales driven by artificial intelligence," and "over time, this expectation is gradually weakening."
The downgrade highlights Wall Street's relatively cautious attitude toward Apple compared with other mega-cap stocks. Less than 60% of analysts tracked by Bloomberg recommend buying the stock, which is lower than other mega-cap stocks. After Jefferies downgraded its rating, Apple was given a "sell" or equivalent rating by four institutions.
