A second broker has taken a bite out of Apple Inc (NASDAQ:AAPL) on concerns that expectations for the iPhone 8 have risen too high.
Mizuho Securities downgraded the glamor stock to ‘neutral’ from ‘buy’, noting that the world’s largest company by market capitalization has risen 29% year-to-date in a market that is only up 9% or so.
The downgrade came after a number of tech stocks took a bath on Friday on fears that the share prices had got a bit toppy.
Mizuho dropped its price target for Apple from US$160 to U$150; Apple’s stock was trading at around US$149 in pre-market trading, down 3.9%.
Mizuho said it is still expecting the next version of Apple’s flagship product, the iPhone, to sell like hot cakes but in its view its expected success is already built into the share price.
It’s a judgment that echoes that of Pacific Crest, which abandoned its long-held bullish stance on the tech giant a week ago.
READ Apple investors are ignoring risk of sales declines beyond iPhone 8 release, analyst warns
Mizuho is concerned that the next generation of the iPhone will largely be bought by the company fanatical legion of evangelists, and will not extend the Apple user base very much.
Peripheral concerns
Extending the user base is critical to Apple because it milks its users like ants running an aphid farm; Apple locks its users into its ecosystem where it can use the lack of alternatives available to sell products at high margins.
Mizuho said in order to get its share price motoring again, Apple needed to extend its user base; achieve higher revenue growth from existing users; persuade Apple users to buy products other than the iPhone.