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Barclays Downgrades Apple (AAPL) Stock, Cites Concerns Over Weak Results and Services Risks in 2024

Barclays analysts recently reevaluated their stance on Apple (AAPL) stock, downgrading it from Equal Weight to Underweight due to apprehensions surrounding sustained weak results and doubts about the sustainability of potential multiple expansions. The downgrade signifies a shift against the general consensus, with Barclays highlighting heightened Services-related risks anticipated in 2024. This decision was accompanied by a lowered price target of $160 per share, indicating a potential downside of nearly 17%. In pre-market trading, Apple shares (NASDAQ:AAPL) dipped by 1.4% on Tuesday.

Barclays’ decision stemmed from recent evaluations revealing concerns about iPhone volumes, product mix, and a lack of resurgence in Macs, iPads, and wearables. Specifically, insights from China regarding the iPhone 15 hinted at a more challenging market, compounded by sustained sluggishness in developed regions. Despite some strength observed in emerging markets, it falls short of compensating for broader weaknesses.

The analysts at Barclays expressed reservations about the iPhone 15’s performance, projecting a similar trajectory for the upcoming iPhone 16. Additionally, while the December quarter is expected to align with expectations, Barclays’ estimates for the subsequent March quarter are below the consensus. They anticipate the March quarter to follow seasonal trends more closely, contrary to the Street’s more optimistic projections, which remain 10 points above seasonal expectations.

Barclays notably revised revenue estimates for iPhones and Wearables in the March quarter, resulting in a downward adjustment of revenue and earnings per share by low single digits compared to their prior estimates. Concerning Services, while the App Store displayed a 10% growth in the December quarter, Barclays anticipates a deceleration to the mid-single digits by the September 2024 quarter.

Futures muted after bumper 2023, Bitcoin tops $45K – what’s moving markets

​U.S. stock futures point to a muted start to 2024 following a blockbuster year on Wall Street. Elsewhere, China’s BYD (SZ:002594) unveils fourth-quarter production figures that heap pressure on Tesla’s (NASDAQ:TSLA) spot as the world’s biggest electric vehicle maker. Bitcoin tops $45,000, bolstered by expectations that U.S. securities regulators may be edging closer to approving an exchange traded fund tracking the megapopular cryptocurrency.

1. Futures hover around flatline ahead of first trading session of 2024

U.S. stock futures hugged the flatline ahead of the start of a new trading year, as investors attempted to gauge the staying power of a bumper 2023 for equities on Wall Street.

By 05:04 ET (10:04 GMT), the Dow futures contract was mostly unchanged, S&P 500 futures had dipped by 4 points or 0.1%, and Nasdaq 100 futures were down by 29 points or 0.2%. Markets were closed for the New Year’s Day holiday on Monday.

The main indices surged last year despite initial worries that an unprecedented string of Federal Reserve interest rate hikes could spark a recession. But resilience in the U.S. economy helped fuel optimism that the Fed could engineer a so-called “soft landing,” in which inflation is cooled without causing an economic meltdown.

Investors will have the chance to parse through a bevy of fresh data this week that could shed light on the state of the world’s largest economy — and, particularly, its all-important labor market — in the final days of 2023.

2. U.S. indices post blockbuster 2023

The major averages all slipped marginally on Friday, although the declines took little away from what was a stellar 2023 on Wall Street.

The benchmark S&P 500 surged by 24.2% annually, closing out the year with a streak of nine consecutive winning weeks — its best since 2004. The tech-heavy Nasdaq Composite also soared by 43.4%, driven in part by strength in mega-cap stocks and emerging enthusiasm over the possible applications of artificial intelligence.

Meanwhile, the 30-stock Dow Jones Industrial Average jumped by 13.7%, boosted by seven record closing levels in the last days of the year.

Equities endured several shocks throughout 2023, including a regional banking crisis marked by the collapse of Silicon Valley Bank and the outbreak of fresh hostilities in the Middle East. Attention now turns to the new year, with some analysts wondering if the solid returns of 2023 may have left stock valuations overstretched.

3. BYD production figures add to pressure on Tesla

China’s BYD said it sold a record 526,000 battery-powered cars in the fourth quarter, putting further pressure on U.S. rival Tesla’s position as the world’s largest manufacturer of electric vehicles (EVs).

For 2023, Shenzhen-based BYD also sold over 3 million new EVs and hybrids, a roughly 62% increase, figures released by the company on Monday showed. The result leaves Elon Musk’s Tesla, which offers only battery-powered automobiles, potentially on track to sell fewer cars than BYD for the second straight year.

Tesla’s output in the first nine months of 2023 clocked in at 1.35 million cars. The group is set to release its full-year production and delivery numbers on Tuesday.

BYD, which counts Warren Buffett’s Berkshire Hathaway (NYSE:BRKa) as a major investor, controlled around 17% of the global market for electric-only vehicles at the end of the third quarter, matching Tesla’s market share.

4. Bitcoin clears $45,000

Bitcoin rose sharply to a 21-month high on Tuesday on increased speculation that the U.S. Securities and Exchange Commission was close to approving a spot exchange traded fund (ETF) for the world’s largest cryptocurrency.

By 05:05 ET, Bitcoin had jumped by 7.0% to $45,630.9, reaching its highest level since early-April 2022.

The increase came as an extension of a strong recovery in 2023 for Bitcoin, when the token surged more than 100% in value after starting the year at around $17,000.

Partly driving the gains was speculation over the SEC’s approval of an ETF that directly tracks Bitcoin’s prices. The regulator has a January 10 deadline to approve or reject a spot ETF application from Ark and 21 Shares, according to a Reuters report. The ruling could set the precedent for ETF applications from several other fund managers for a similar product.

5. Oil rises

Oil prices rose Tuesday, rebounding after hefty losses in 2023, on concerns over potential supply disruptions in the Middle East.

Reports said on Tuesday that an Iranian warship had entered the Red Sea, a vital trade route between Europe and Asia. The news added to fears over the flow of supplies in the region, which has been impacted recently by a series of strikes by Iran-backed Houthis on several military and commercial vessels.

By 05:04 ET, the U.S. crude futures was trading 2.2% higher at $73.25 a barrel, while the Brent contract had climbed 2.3% to $78.81 per barrel.

Both benchmark contracts had shed over 10% each in 2023, coming under pressure from persistent concerns over sluggish demand and higher-than-expected supply conditions.


Danone Sells U.S. Organic Dairy Divisions to Platinum Equity, Continuing Portfolio Reshuffle

Danone Announces Sale of Premium U.S. Organic Dairy Units to Platinum Equity

French food group Danone confirmed its agreement to sell its prized organic dairy divisions, Horizon Organic and Wallaby, in the United States to investment firm Platinum Equity. The move is part of Danone’s ongoing portfolio review and asset rotation strategy initiated in March 2022. While the financial specifics remain undisclosed, Danone’s CEO, Antoine de Saint-Affrique, highlighted that this divestiture aligns with their aim to refocus on robust, health-centric brands and reinvest in core growth areas.

Although Danone will maintain a minority stake in the business, the company anticipates an impact on its 2024 financials. This strategic step follows Danone’s earlier exploration, announced in January of the prior year, of potential options, including a sale, for its U.S.-based organic dairy operations. The divested organic dairy segment, consisting of Horizon Organic and Wallaby, encompassed a spectrum of organic dairy products like milk, creamers, yogurt, cheese, and butter.

This branch accounted for about 3% of Danone’s global revenues and had a dilutive effect on the company’s like-for-like sales growth and recurring operating margin in 2022.

As the new year unfolds, the landscape of investment opportunities continues to evolve, presenting both seasoned and novice investors with a fresh array of possibilities. The beginning of a new year often signifies a chance for introspection and strategic planning in the realm of finance. It’s a time to reassess goals, consider market trends, and explore emerging sectors ripe for investment. Whether one leans towards traditional avenues like stocks and bonds or seeks to delve into the burgeoning realms of cryptocurrency, green energy, or innovative tech startups, the new year beckons with promise and potential. The key lies in informed decision-making, prudent risk assessment, and a long-term vision that navigates the uncertainties while capitalizing on the opportunities that lie ahead.