What happened
Shares of Apple (AAPL +0.01%) traded lower on Wednesday, slipping as much as 2.3%. When the market closed for the day, the stock was still down 1.1%
A broad cross section of stocks ended the day lower, which no doubt helped fuel Apple's decline. More pertinent to Apple investors, one analyst raised the specter of slowing iPhone sales in the face of tough macroeconomic conditions, while another was moderately more bullish.
NASDAQ: AAPL
Key Data Points
So what
Jefferies analyst Kyle McNealy dug deep on global web-traffic patterns and concluded that iPhone sales "saw some deceleration" during the month of February. As a result, the firm now believes sales likely ended the quarter in-line with expectations when they were previously ahead.
More recent data suggests that average selling prices (ASPs) are higher than consensus estimates, according to the analyst, so Apple's revenue could still come in ahead of Wall Street's projections. The firm maintained its buy rating and $195 price target on the stock, which suggests potential gains for shareholders of 19% compared to Wednesday's closing price.
At the same time, Bank of America (BofA) raised its price target on Apple to $168 from $158 and maintained a neutral rating on the shares. This suggests the analyst was playing catch up since Apple shares ended Tuesday at $165.63 -- above his previous call.
After reading the tea leaves and checking sales channels, the firm believes the iPhones and services segments are "stable to better," though Mac and iPad sales have suffered. He believes the combination will likely keep gross margins stable, and this stability "modestly" increases his expectations for the full year.
Now what
There's no question that Apple's success or failure rests mostly on iPhone sales, which represented 56% of the company's revenue in its fiscal first quarter ending Dec. 31. High inflation and economic uncertainty will almost certainly weigh on Apple's performance -- at least in the near term.
Seasoned investors are keenly aware that "this too shall pass." By creating some of the most popular technology devices on the planet, it will certainly take more than a downturn to reverse Apple's long-term fortunes.
