Analyst: Apple Could See Double-Digit Stock Declines In 2019

Apple investors may want to brace for a tough 2019 if a prediction from Pelham Smithers Associates proves true.

In an interview with CNBC Thursday (Dec. 27) Pelham Smithers, managing director of the U.K.-based equity research firm, said shares of the Cupertino, California iPhone maker could be hurt by slowing economic growth in China and the ongoing trade war between the U.S. and China. Apple has several Chinese manufacturing plants that will be impacted by the trade war, predicted the analyst.

“We’ve seen (Apple) on valuations even lower than where they are today,” Smithers said in an email to CNBC. “And with the Qualcomm lawsuit, smartphone exhaustion, and trade worries, we could easily test those historic lows, which would mean up to 25 percent downside from here.” In the case of Qualcomm, the analyst was referring to the ongoing court battle over chips used in Apple’s iPhones. As for smartphones, demand around the globe has been slowing as market saturation sets in.

At the same time that Smithers is warning of a steep decline in Apple’s shares next year, he said the sell-off in the stock will set up a buying opportunity that is rare with Apple. He said the buying opportunity may happen later next or in 2020. Apple is expected to roll out 5G handsets at that point which the analyst said will provide more clarity into the business prospects for the iPhone maker.

“Ultimately they (Apple) are a consumer solutions company, and the first step to that is the hardware. And then it’s what the hardware can do with the software,” Smithers said during an appearance on CNBC’s “Squawk Box Europe” Thursday (Dec. 27). “So as we move into the 5G era, it is the effectiveness of the handsets, of their tablets in this environment, either from an enterprise viewpoint or a consumer viewpoint that will be key.”