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Apple removed from Goldman Sachs ‘conviction buy list’

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Apple removed from Goldman Sachs ‘conviction buy list’

Apple shares had a subdued start on Wall Street after Goldman Sachs removed the Cupertino company from its ‘conviction buy list’. The company led by Tim Cook is facing some obstacles, including the slowdown in iPhone demand and difficulties in the Chinese market. Factors that are partially holding back the stock, also due to an unclear strategy to ride the artificial intelligence (AI) trend. However, Goldman reiterates its Buy rating and raises its target price.

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Apple excluded from Goldman’s ‘conviction buy list’

The analysts of Goldman Sachs they have removed Apple from the ‘conviction buy list’, the list of 20-25 US companies which according to the American bank they can generate returns significantly higher than those of the market.

As part of the review, Merck and Vertex Pharmaceuticals were also removed from the list, while Amgen, Monday.com and Vulcan Materials joined. Other Wall Street big names such as Nvidia and Amazon are included in the list.

Apple was removed after 274 days of militancyduring which he recorded a 21% underperformance versus the S&P 500 Index. In February, Cupertino shares lost 1.9%, compared to +5.2% for the benchmark.

Goldman confirms Buy on Apple and raises price target

Inclusion or removal from the list does not necessarily imply a change in the security’s rating. As for Apple, Goldman maintained a buy recommendation, even increasing the target price from $223 to $232.

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That’s because “the market’s focus on slower product revenue growth masks the strength of the Apple ecosystem and the associated revenue durability and visibility.” For analysts, “the installed base growth, new services and product innovation can more than offset cyclical headwinds linked to product revenues, such as a momentary decline in demand for iPhone due to a longer replacement cycle and lower demand for PCs and tablets.”

According to the Bloomberg consensus, the title Apple has 33 Buys, 17 Holds and 7 Sells, with an average target price of $200.35compared to yesterday’s closing at $180.75.

Obstacles

Apple has faced a series of headwinds of late. Following the quarterly report, the stock mainly suffered weak sales in China, down 13% in the three months ending in December. The iPhone maker also implemented discounts to push demand in the country, a sign of weakness not appreciated by the market, concerned about restrictions related to geopolitical tensions and competition from local manufacturers, such as Huawei.

In recent days, the Cupertino company has also abandoned the project to develop a proprietary electric car, repurposing hundreds of resources on artificial intelligence. Precisely the lack of a defined plan to exploit AI has contributed to the not too optimistic climate surrounding the stock, so this move could have positive implications.

The company led by Tim Cook appears to be lagging behind other big tech companies and perhaps this is also why the CEO has announced the opening of “new horizons” on the generative AI front in 2024.

Apple

Apple shares opened today’s session down 0.5%, bringing the drop from the beginning of the year to over 6 percentage pointscompared to +7.4% for the Nasdaq and +6.8% for the S&P 500.

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The Cupertino company has so far underperformed the other companies belonging to the elite of the Magnificent 7. However, Apple remains the second technological company in the world by capitalization, with a market cap of 2,791 billion dollars, behind only Microsoft ($3,073 billion).

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