Citigroup (C) downgraded Apple (AAPL) from ‘Buy’ to ‘Neutral’ late Sunday. Citing a research note that shows concerns over iPhone 5 sales and “near-term supply-chain order cuts,” analyst Glen Yeung wrote that the cuts “bring into question the strength of iPhone 5” as well as the risks associated with the “Apple story.” Yeung cut his price outlook on the stock from $675 to $575.
[via Forbes] “Our previous Buy rating was trading oriented, reflecting our expectation for a near-term rally (after a substantial sell-off) on strong iPhone 5 sales,” he writes. “However, near-term supply chain order cuts, while inconclusive in nature, bring into question the strength of iPhone 5 and refocus investors onto risks in the Apple story. As such, we see the likelihood of any near-term rally as diminished, and, in keeping with our original thesis, downgrade the shares to Neutral.”
Last week UBS AG (UBS) and Jefferies Group (JEF) cut their price targets on the iPhone-maker from $760 to $700, and from $900 to $800, respectively, sending the stock tumbling 4 percent on Nasdaq’s Dec. 14 trading session.
But despite the downgrades and Citi’s doubts on the strength of iPhone 5, Apple on Sunday night announced record sales of the smartphone in China. According to an Apple press release, the company sold over two million of the new iPhone 5, just three days after its launch.
“Customer response to iPhone 5 in China has been incredible, setting a new record with the best first weekend sales ever in China,” Tim Cook, Apple’s CEO, said in a statement. “China is a very important market for us and customers there cannot wait to get their hands on Apple products.”
Shares of Apple closed Friday at $509. However, Monday pre-market trading shows Apple printing the tape below $500 a share for the first time since February, at $499.22, down $10.57, or 2.07%.
AAPL is now down more than 28% from its all-time high of $705.07 recorded when the iPhone 5 first launched on Sept. 21.