Apple shares drop 3% after Mizuho downgrade

12 Jun

Apple shares drop 3% after Mizuho downgrade

Apple shares were stung by a broker downgrade for a second straight week on Monday, sending the stock lower in early trading, and on the heels of a sharp selloff in the tech sector in the prior session.

Mizuho Securities cut its rating on the iPhone maker to “neutral” from “buy” and reduced its price target to $150 from $160 per share.

“The stock has meaningfully outperformed on a year-to-date basis and we believe enthusiasm around the upcoming product cycle is fully captured at current levels, with limited upside to estimates from here on out,” said analyst Abhet Lamba.

Last week, Pacific Crest Securities lowered its rating on the stock to “sector weight.”

Apple shares were down 3.1 per cent to $144.30 in early trading.

Tech shares came under heavy pressure on Friday, falling 2.7 per cent.

Suppliers to Apple Inc. have borne the brunt of the decline in tech sector stocks after a sell-off started in the U.S. spread to Asia and Europe.

In Europe shares in AMS AG, the Swiss-listed supplier of sensors, fell as much as 9 per cent, while chipmaker STMicroelectronics NV traded as much as 8 per cent lower. The Stoxx 600 Technology index fell as much as 3.6 per cent, the biggest decline in nearly a year.

On Friday, Robert Boroujerdi, global chief investment officer at Goldman Sachs Group Inc., said that low volatility in Facebook Inc., Inc., Apple Inc., Microsoft Corp. and Google parent Alphabet Inc. may be blinding investors to risks such as cyclicality and regulation. Apple’s new iPhone is also said to be lacking the tech to match rivals’ data speed, according to a Bloomberg report Friday.

“It is really the U.S. selloff that is happening now in Europe,” said Charles Lepetitpas, analyst at Natixis Securities. “I don’t see any specific news.”

Both AMS and STMicroelectronics — the biggest tech fallers in Europe — supply chips to companies such as Apple and Samsung. AMS also flagged a weaker-than-expected dividend late Friday. Many of the stocks being hit have been on a tear this year: AMS is the biggest riser on the Stoxx Europe 600 in that period, having more than doubled.

“Some investors are just taking profit,” said Karsten Iltgen, analyst at Bankhaus Lampe KG.

The European slump was the last leg in a global tech selloff that began Friday in the U.S. In Asia, Taiwanese iPhone manufacturer Hon Hai Precision Industry Co., Ltd, closed 2.9 per cent lower. It was the largest single-day decline since last November, according to data compiled by Bloomberg. Hon Hai, better known as Foxconn, said Friday its May sales declined 5.3 per cent year-on-year to NT$279.8 billion.

With files from Bloomberg News

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