Mike Wuerthele
A noted analyst has slashed his expectation for Apple stock by about 10% given what he sees to be slower iPhone upgrade rates because of tariffs, and a delayed Siri with Apple Intelligence rollout.
In a note to investors written by Morgan Stanley's Erik Woodring, Apple's headwinds have been re-evaluated. The most recent fears for Apple's bottom line appear to be the postponement of Siri upgrades, higher product import costs because of Trump administration tariffs, with both leading to lower earnings per share.
While Woodring remains bullish on what may be a redesigned iPhone 17 driving sales, he's less certain about other avenues of success. He's decreased calendar year 2025 iPhone shipments a bit, with sales in 2025 being flat year-over-year, as opposed to an increase.
The analyst appears to be leaning on a survey that they ran, citing "access to advanced AI features" as a driver of smartphone sales. We're not certain how accurate this is, given survey biases for surveys like this have historically tended to be toward the higher-end of iPhone sales, versus the larger market that has generally not cared if they have the newest features or not.
Woodring feels that the upgrade cycle will continue to lengthen given Apple's staggered — and sometimes delayed — Apple Intelligence feature roll-out. He does eventually expect a contraction, but not until the 2027-2028 cycle year, and therefore not relevant to Wednesday's price target trim.
As far as the impact of tariffs will apply to Apple, that remains fluid. Woodring assumes that Apple will get hit by $2 billion in product costs.
He's not clear if the company will increase prices to offset that. Given that exporting countries don't pay the tariffs, and importing companies do, it's not out of the question.
In the short term, Woodring believes that $200 is the absolute floor for Apple stock. The upper limit in the short term is $250 — just short of the new $252 target.
Morgan Stanley's last price target for Apple stock was set just after earnings, at $275. Woodring said then that iOS 18.4 in April was an "important catalyst" looking forward for iPhone sales.
At the time, that update was expected to have the upgraded Siri and support for multiple languages, therefore expanding the demand for the iPhone in the newly-supported countries. The update will arrive on time, but the upgraded Siri has been delayed.
Since the January note, Apple stock has been roughly flat. It peaked at just over $247 in late February. However, increased saber-rattling about tariff applications and other factors weighing on the economy have bled off all the gains since the better-than-expected earnings.
Apple stock is down $2 on the price target decrease, and fears about the global economy as a whole.
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Malcolm Owen
William Gallagher
Christine McKee
Charles Martin
6 Comments
Well honestly my iPhone 11 was doing everything I wanted and needed. If I hadn’t had a weird occurrence I wouldn’t be upgrading this weekend. It was in my pocket when I woke up from a nap on the couch. Unfortunately the camera is toast and I use it to image documents for taxes. If it weren’t for this I was planning on holding out until at least this fall.
Analysts have always been wrong with Apple.
"slashes" is a bit of an exaggeration given it has 15% upside from where we are
If you plan to hold shares indefinitely for decades to come, as I plan to do, why does any of this matter?
That's OK with me. Meanwhile, Apple can buy back shares to get the share count under 15B shares. I'm not overly concerned about the share price, as I mostly depend upon the dividends as passive income. I have been holding Apple shares for about 20 years, and I've seen Apple's ups and downs. I think it's a tough economy, and I don't expect consumers to buy items they don't actually need. Credit card debt is high, and many people are losing their jobs. If Apple loses value, I just consider it a sign of the times. I think current sales have little to do with missing Apple Intelligence, and I'm not a fan of A.I. and I'm not angry or upset about Apple Intelligence not being as good as expected. I doubt any company is profiting much from A.I. spending. I have enough Apple stock to keep my life comfortable even if the price stagnates. I have no reason to complain. Even a $252 price target will satisfy my needs.