Financial research firm Moffett Nathanson predicts that Apple (AAPL, Financial) will continue to experience stock price declines, despite already falling over 23% this year. Analyst Craig Moffett reiterated a "sell" rating for Apple, reducing the target price from $184 to $141. This suggests a potential downside of more than 28% from its recent close at $196.98.
Moffett lowered Apple's long-term earnings expectations due to the impact of tariffs imposed by the U.S. government and ongoing trade tensions. Although he slightly raised the short-term earnings per share forecast for fiscal year 2025 from $7.18 to $7.20, this is based on consumers rushing purchases to avoid tariffs, an effect he believes will not last. Wall Street, in comparison, projects a 2025 EPS of $7.26.
For fiscal year 2026, Moffett now expects an EPS of $7.06, down from a previous forecast of $7.87 and below the market average of $8.00. Despite a temporary reprieve from additional smartphone tariffs, Apple still faces significant tariff challenges.
Since Moffett's January downgrade to "sell," Apple's forward P/E ratio has dropped from 32x to about 27x. Currently, Apple is down over 3%, with a monthly decline exceeding 14% and a year-to-date drop of 23%.
Moffett warns that market expectations have not fully accounted for Apple's challenges, which could lead to further declines in the P/E ratio. Apple is caught in the trade war, facing higher costs either from tariffs or supply chain restructuring. Additionally, Apple lags in AI commercialization, failing to boost iPhone demand. The antitrust case against Google's parent company Alphabet could also pose risks, as over a quarter of Apple's operating profit comes from search engine revenue sharing with Google.
