Apple shares tumbled noticeably this week after Phillip Securities switched its recommendation from Neutral to Reduce. The downgrade occurred when the stock stood at $226.79, a price it reached after a sudden market-wide rally.
While the company still boasts a market cap of $3.37 trillion, the action highlights growing concern that the stock’s multiple has begun to exceed what the near-term results can support.
Phillip set a new price target of $200, implying a further drop of about 12 % in the short run. The target came from a discounted cash-flow model that uses a 6.5 % blended rate for both equity and debt, along with a 3 % long-term growth assumption.
The analysts say that the resulting multiples are far too high as compared to the forecasted earnings and projected free cash flow.
In their view, it can no longer support the recent multiple increase. The analysts pointed out that the company’s revenue, margin, and innovation guidance remain sound; the downgrade simply indicates that the market has already discounted the benefits of the recent, macro-driven valuation rise.
Philip Securities recently flagged a key caution about Apple hasn’t made the type of breakthrough in artificial intelligence that rivals keep claiming.
While many other tech companies are quickly slapping AI onto every product, Apple is still trying to develop AI functions strong enough to offset the slow decline in some of its older product lines.
Analysts in particular point to China as a long-term concern, where tariffs and tighter rules keep squeezing a market that is one of Apple’s biggest. On top of that, rising capital spending is raising questions about whether immediate profits will justify the extra spending.
Despite the lower ratings, Apple’s balance sheet still looks good. Latest InvestingPro numbers show that revenue rose by 5.97% year-over-year, proving that the company’s market position is still holding up.
Apple is facing a mix of challenges and countermeasures. New tariffs still loom, the Chinese economy keeps slowing, and regulators are taking a hard look at the company’s AI ambitions.
Despite that, steady growth in services, strong demand for premium devices, and a remarkably loyal user base serve as a cushion that competitors can’t match.
Analysts are sending the same message through price targets, which are set between $200 and $290. This range underscores that the conversation about weighing risk against reward is still ongoing and intense. The takeaway isn’t a rush to hit the red button, but to look straight into the balance sheet and reframe the pitch.
