Goldman Sachs Analyst Bearish on Apple Shares in 2021

An Apple analyst believes Apple shares are headed downwards.

Goldman Sachs analyst Rod Hall reiterated his sell rating on Apple shares late Thursday, arguing that the current iPhone upgrade cycle looks more like a typical redesign cycle rather than the “supercycle” some were hoping for. Hall has been bearish on Apple’s stock since April 2020.

“As a result we continue to expect iPhone replacement rates to resume their ongoing decline in 2021,” he wrote, helping drive his below-consensus forecasts for the full year and particularly the second half of the year. “In addition, our negative thesis on Apple is based on [average selling prices] remaining roughly unchanged in 2021 as consumers shift toward lower priced iPhones and this seems to be beginning to play out in supply chain orders.”

The analyst is worried that Apple is cutting production orders, while customers are beginning to prefer lowqer-priced iPhones compared to their more expensive counterparts. On the shorter term, however, Hall does believe that Apple will report a strong holiday quarter given “solid consumer demand.”

And while the COVID-19 pandemic has limited people’s ability to spend on things like travel and eating out, potentially leaving them with more spending money for electronics like Apple products, the analyst believes that a shift to out-of-home spending as the economy starts to reopen could be a “negative catalyst” for the Cupertino company’s shares.

“We believe the shift of consumer disposable income toward vacations, restaurants, and other outside of the home spending as re-opening occurs is likely to act as a negative catalyst for Apple’s stock just as COVID lockdowns represented a tailwind,” writes the analyst.