We talked in an article earlier this week about the market’s not-so-fantastic year that’s been masked by the spectacular trading of a handful of big-name companies. But, missing from that list of strong performers is one extremely well-known tech company that is actually in jeopardy of closing the year in the red for the first time since 2008.
Apple (AAPL) started off the year on a strong note, rallying through the first two months and holding steady until a late-summer flash crash sent shares of Apple stock plummeting from over almost $135 to as low as $92 on August 24. While Apple stock has regained some of that lost ground since, it’s still trading 18% off its April highs.
AAPL has been under a lot of scrutiny lately, as weakness in the smartphone industry points toward disappointing iPhone sales for not only the current quarter, but also the first quarter of 2016. Considering Apple derives the majority of its revenue from smartphone sales, this is a major issue.
In recent weeks, analysts have been consistently lowering their expectations for Apple stock. Credit Suisse lowered its projections to 77 million iPhones sold in the quarter ending in December (down from 78 million) and 52 million units in the quarter ending in March (down from 55 million). UBS, R.W. Baird and Raymond James have made similar revisions, and Morgan Stanley went so far as to cut its price target on Apple stock from $162 to $143 on Monday.
In addition to analysts’ concerns, weakness at various AAPL suppliers has also added to the mix.
The good news is that Apple stock has still managed to hold near its key $110 support level. But, the bad news is that it’s hugging that line as closely as it possibly can, and a break below could open up a new move to the downside.
In a world that’s become accustomed to seeing double-digit yearly returns from this technology behemoth, it’s especially concerning to the see AAPL flirting with negative year-to-date performance. So, while there’s certainly plenty of room for upside in Apple stock, I’d be skeptical to force a buy here.
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