Apple suffers another blow after Wells Fargo downgrade knocks shares
Apple shares have fallen after investment bank Wells Fargo downgraded the company due to “limited” opportunity for it to improve profits and lower expectations on the success of the soon-to-launch iPhone 6.
Downgrade: Apple shares were hit by Wells Fargo move
Shares in the company fell by as much as 1.4pc in US trading on Thursday following the decision to downgrade Apple’s rating from “outperform” to “market perform”.
According to Wells Fargo, the effects of struggling consumer finances combined with the expectation that the iPhone 6 will be less profitable than previous iPhones accounted for the downgrade.
While the bank acknowledged the likelihood of impressive iPhone and iPad sales in the last quarter of 2013, it predicted that development costs associated with the iPhone 6 would probably reduce margins.
Banks analysts said: “There is limited amount of incremental market cap opportunity in the existing product segments Apple plays in (including the TV and watch opportunities) without material market share gains.”
Apple reported record fourth quarter revenue of $37.5bn in its most recent figures, a rise of $1.5bn on the year before, although profit had fallen from $8.2bn to 7.5bn.
Marketing analysts warned that the smartphone market has seeing rising popularity for cheaper, mid-tier devices and said Apple may need to adapt its pricing strategies.
The company downgrade is the latest PR blow for Apple in recent days. This week, Apple was forced to deny suggestions it may have worked with the NSA to allow the security service to install spyware on iPhones.