iPhone 16 won't be compelling, says analyst with no compelling data

Mockup of a possible iPhone 16

Barclays has only cut its Apple price target by a dollar — from $161 to $160 — but it calls the stock underweight and has no expectation of it improving.

"We expect reversion after a year when most quarters were missed and the stock outperformed," said Barclays analysts in a note to investors seen by AppleInsider. "Our checks remain negative on volumes and mix for iPhone 15, and we see no features or upgrades that are likely to make the iPhone 16 more compelling."

According to Bloomberg, Apple's stock was down $1.40 in pre-market trading. At the time of writing, it has now dropped 2.92%.

Barclays was similarly dismissive of the iPhone 15 range ahead of its launch, however. In that case, the presumption was less about compelling features, and more that the analysts were certain the iPhone 15 Pro would see a steep price increase.

Investment analyst Tim Long has also tended to be pessimistic about Apple since Barclays resumed covering its stock in 2019. At that point, Barclays predicted Apple's Services growth would slow and that 2020's move to 5G would not make a "meaningful difference" in sales.

The iPhone is considered the most important product category for AAPL with about 50% of revenues stemming from it. However, with sub-seasonal quarterly growth for five in the last six quarters and with negative number revisions, Barclays expects "this trend to continue."

Supply chain checks have pointed to production cuts and sell-through weakness, as well as a shift in product mix towards base models over Pro versions.

On Mac and iPad, the note explains they basically showed "no growth pre-COVID, but are still running 20-30% above those levels despite the rest of the industry correcting."

A deceleration in growth for Services in 2024 and 2025 is expected, with growth thought to be about 10% and 8% respectively, well below the previous 20% growth estimate. Barclays warns of the impact of Google TAC and that investigations into the App Store could intensify.

Apple's advertising is "the best business in Services," with high double-digit growth. Apple Music and Apple TV were expected to have higher attach rates, but they're calculated at 8% and 3% penetration of the iPhone base.

For Apple TV+, Barclays estimates that Apple is losing about $6 billion per year, due to a lack of scale and a high cost of content.