Apple shares slide after Mizuho downgrade

8 years ago - Published in Commodities, Finance

Apple shares fell more than 2 percent Monday, falling for a second-straight day due to mounting concerns about unsustainably high stock prices. The iPhone maker's stock has lost nearly 6.2 percent of its value in just two days. Technology stocks have been hit particularly hard, as some investment firms fear that stocks like Facebook, Amazon, Netflix, and Alphabet in particular rose too quickly. 

Japanese bank Mizuho downgraded Apple to a "hold" rating on Monday, as analyst Abhey Lamba believes enthusiasm around the company's upcoming product cycle is "fully captured" at current levels, with limited upside to estimates from here on out. The bank lowered its AAPL price target to $150, down from $160. 

Mizuho still believes the much-anticipated iPhone 8 will be a strong seller for Apple, and even increase revenue due to it's higher expected average selling price of the new phones. The higher price will come from an upgraded OLED screen with a built-in fingerprint sensor.

Andy Hargreaves, equity research analyst at Pacific Crest Securities, also downgraded Apple's stock last week. In a research note distributed to clients, he said excitement surrounding the so-called "iPhone 8" appeared to be "priced in," compounded by risks such as the potential for gross margin pressure. 

Wall Street analyst Brian White of Drexel Hamilton believes otherwise, calling the recent dip in Apple's stock price another buying opportunity. 

"In our view, Friday's sell-off in Apple represents yet another buying opportunity as investors turn their focus to the iPhone 8 this fall, along with the company's raised capital distribution initiative, depressed valuation, and new innovations," said White, in a research note distributed to clients on Monday. 

"We continue to believe Apple remains among the most underappreciated stocks in the world," he added. 

White said Apple shouldn't be compared to the likes of Facebook, Amazon, Netflix, and Google, jointly called FANG, as the iPhone maker's stock has significantly underperformed against its rivals over the past five years. 

Apple, the largest market-cap stock in the S&P 500, ranks third worldwide by the value of short interest in its stock at $9.1 billion, just behind Alibaba at $16.7 billion and Tesla at $10.5 billion, according to financial analytics firm S3 Partners.