Apple slides after analyst downgrades it to sell over lackluster sales

Getty/Carl Court

• Shares of Apple fell 1.5% in early trading on Monday after Rosenblatt Securities downgraded the iPhone maker from to “sell” from “neutral.” 
• Analyst Jun Zhang highlighted flat sales for the iPhone in June and a potential slowdown in production of the iPhone XR as the reasons for the downgrade. 
• Zhang also said Apple’s service revenue could begin to slowdown as well. 
• Watch Apple trade live.

The future of Apple’s most successful product line is looking dim. 

Apple’s stock fell by roughly 1.5% in early trading on Monday morning after receiving a downgrade from Rosenblatt Securities due to slow iPhone sales in June and expected production cuts for the XR model. 

“We believe Apple reduced iPhone XR production for Q3 in order to prepare for the ramp of the new iPhone models and because of weakness in sales in Q2,” Jun Zhang, an analyst at the firm, said in a note to clients on Monday. 

Markets Insider is looking for a panel of millennial investors. If you’re active in the markets, CLICK HERE to sign up.

Apple’s sales from other hardware products such as the HomePod, AirPod, and iWatch might not be strong enough to boost overall revenue, Zhang warned. He also expects iPad growth to slow in the second half of 2019. 

Apple is widely expected to begin making a push toward generating a greater portion of its revenue from services such as Apple News, Apple Music, and Apple TV Plus to cope with slower iPhone sales. Zhang said that the company could see a slowdown in those areas as well.

“After strong service revenue growth over the last 4-6 quarters and the launch of Apple Music and news, we believe service revenue growth will also decelerate.” Zhang said. 

Rosenblatt downgraded Apple to “sell” from “neutral” on Monday while maintaining a price target of $150.

“We believe there is less reward for owning Apple stock after the recent stock rebound from stock buybacks and the stable second quarter guidance,” Zhang said. 

Apple was up 29% year-to-date through last week.

Now read more markets coverage from Markets Insider and Business Insider:

The IPO market has been red-hot in 2019. Here’s why Wall Street experts see no signs of slowing.

Amazon’s stock price on its 25th anniversary shows the potential of investing early in game-changing companies that become consumer favorites

The inside story of how Robinhood, a $6 billion investing app for millennials, blew a huge launch so badly that Congress got involved

Markets Insider