The iPhone 8 is just around the corner, and everyone is getting excited over the features that are expected to be included with the phone. But despite this, there have been speculations as to what this could mean for the stock of the technology giant, Apple.
According to CNBC, Apple stocks got a rare downgrade at the start of the week, taking them from overweight to sector weight. This is a surprising bit of information, given that the stocks had experienced a 33% increase this year, hitting an all-time high just last month due to the iPhone 8’s announcement.
Analyst Andy Hargreaves told his clients to buy Alphabet shares with the money raised by selling some Apple stock, in light of the downgrade.
“We believe AAPL anticipates strong performance in the iPhone 8 cycle, while providing relatively little weight to risks through the cycle or the potential for iPhone sales to decline in FY19,” he wrote in a note to investors.
In his note, he cited risks “around gross margins, elasticity, supply issues, or the likelihood for declines beyond the iPhone 8 cycle.”
The supply issues being that there are not enough phones to meet demand, whether that be due to an underestimation of how many phones would be wanted, or lack of parts due to the list of features, is unknown. This lack of supply, Hargreaves predicts, will harm sales.
The assembly of an iPhone requires many small components and custom screws like micro-screws to hold the phone together. These screws can be either regular or SEMS screws, which combine a washer and screw into one, and make assembly of small devices like a phone easier.
Despite the 33% jump in stock price, Hargreaves predicts the stock will actually be $10 lower —
$145 a share — 12 months from now.
Technology-focused research firm Pacific Crest suggests that large-cap tech investors use proceeds from sales of AAPL to purchase GOOGL, which they believe will be a better “risk/reward profile and more substantial upside potential than AAPL.”
