Shares of Apple (AAPL) stumbled out of the gate in 2024 as Wall Street giant Barclay’s downgraded their outlook on the stock from “Equal Weight” to “Underweight.”
Let me translate that for you… they took it from a hold to a sell.
This puts Barclay’s in the vast minority as, according to TipRanks, there is only one sell rating on the stock.
So once again, is this analyst crazy to go against the grain?
Let’s look at a few things to determine how I think you should handle this downgrade.
First, Barclay’s Performance With Apple
The firm started coverage of AAPL on August 19, 2019 with a “buy” recommendation. Since then, the stock has returned more than 150%. In the time between their “buy” and now “sell” of the stock, Barclay’s has reiterated their outlook eight times.
What About Other Big-Name Brokers?
As indicated, almost all Wall Street firms currently recommend the stock to you as a “buy,” but there have been some similar downgrades in the last five years.
Goldman Sachs (GS) downgraded the stock to a “sell” in April 2020. The move was an obvious reaction to the pandemic. Outside of that, no other large institutions have downgraded AAPL to a “sell” in the last five years.
How did that work out for Goldman?
Less than a year later in April 2021, Goldman upgraded the stock as it was trading about 10% higher than where they had downgraded it.
Lesson learned: it’s very hard to downgrade Apple stock and win.
Bottom Line
We usually hear about “window dressing” at the end of the year, not the beginning, but I think that’s all the analyst is doing here by taking profits on their bullish call in 2019.
The firm will end up upgrading the stock in a relatively short period unless things go to hell in a bucket fast.
Sure, AAPL has underperformed the market over the last six months, but you’ve got to remember that AAPL is one of those stocks that IS the market, and this is a hard market to short… Like picking up pennies in front of a steam roller, which is what this looks like.
The stock is likely to move to $180, where its 200-day moving average sits. At that point, the rest of the analysts that are bullish will start to reiterate their positions, moving the stock back towards its highs.
I’ll take Apple at $180.
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About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
