Apple (AAPL -0.35%) stock has underperformed the broader market this year, down 10% year to date. Citi analyst Atif Malik rates the stock a buy, but he trimmed his near-term price target over concerns about sluggish iPhone demand in China.
Malik's new price target is $220 a share, which still represents an upside over the next 12 months or so of 27% over the current share price of roughly $173.
Why Apple stock is down
While Wall Street generally operates on a shorter time frame than the average investor, analysts' opinions can be valuable in understanding what is driving the stock's performance in the short term. In this case, the analyst cited weakening smartphone sales in China for the price target cut.
Apple is coming off a strong quarter, where iPhone revenue grew 6% year over year in the December-ending quarter. However, a recent report from Counterpoint Research showed that weekly smartphone unit sales in China through the first six weeks of 2024 were down 7% year over year. Most notably, iPhone unit sales were down 24%.
Weak demand in China doesn't mean Apple is losing its edge. While iPhone revenue in China fell last quarter, it also hit records in Europe and the rest of Asia Pacific.
Is Apple stock a buy?
China is a wildcard for Apple, but the company's growing installed base of devices, which continues to hit record highs, is a better indicator of its global brand strength and where the business is headed over the long term.
The stock is still a good investment. Apple's high customer satisfaction sets up solid growth prospects as the company introduces new features powered by artificial intelligence for its flagship product.
