Investing.com -- Apple's stock has received its second Sell rating in just three months, pushing its shares 1% lower premarket on Tuesday.
Analysts at MoffettNathanson downgraded Apple to a "Sell" rating with a target price of $188.
They expressed concerns about the company’s future prospects. The downgrade comes after a period of gains, despite ongoing negative developments surrounding the tech giant.
MoffettNathanson analysts note that while Apple shares (NASDAQ:AAPL) have been steadily rising, much of the news surrounding the company has been unfavorable.
They point out that "a great deal of Apple-relevant news" has been bad and overlooked by investors, including legal and competitive challenges.
A key concern is said to be the anti-trust case against Alphabet (NASDAQ:GOOGL), which threatens Apple's $25 billion per year in search payments from Google. MoffettNathanson warns that this risk has not been sufficiently priced in by the market.
The analysts also highlight the weakening of Apple’s position in China, with increasing competition and reluctance over Western AI models making it harder for Apple to maintain its dominance.
Furthermore, Apple’s Vision Pro, which had low expectations to begin with, "has disappointed even the low expectations."
“While the incoming Trump Administration is likely to exempt Apple from import tariffs, there is a genuine risk that Apple will be targeted with retaliatory tariffs in countries negatively impacted by U.S. import duties in unrelated categories,” adds the firm.
Most concerning for MoffettNathanson, however, is the lackluster consumer response to Apple's AI features.
“We have seen growing evidence that consumers are unmoved by AI functionality," they note, with broader concerns about the lack of an upgrade cycle and slow progress in AI development.
This is said to represent a significant hurdle for Apple, especially as "fully agentic AI" remains further away than expected.
Despite Apple being a "truly great company" with a remarkable product lineup, MoffettNathanson believes its stock is overpriced. The analysts argue that "Apple’s share price discounts nothing but good news," and with a low growth rate compared to its peers, the outlook for Apple shares is "decidedly unattractive."