Apple cut to Neutral on 'full' valuation: 4 big analyst cuts

Investing.com — Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Apple, Charles Schwab , Etsy, and Zillow Group.

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Apple cut to Neutral

Redburn-Atlantic downgraded Apple (NASDAQ:AAPL) to Neutral from Buy with a price target of $200.00, as reported in real-time on InvestingPro.

The analysts noted that while there is an expectation for the iPhone to return to growth in 2024, the prospects for significant upside in the coming years seem limited. Additionally, concerns are raised about a potentially lackluster March quarter, which could affect confidence in this growth outlook. The analysts also pointed out the increasing regulatory risks that may impact Apple's ability to monetize its ecosystem effectively.

Looking ahead, we forecast Services’ contribution to EPS to continue to increase, but only relatively modestly, reaching 49% at YE26 compared to 46% currently. As a result, we see limited potential for further multiple expansion from evolving business mix.

Charles Schwab downgraded at Citi

Citi downgraded Charles Schwab (NYSE:SCHW) to Neutral from Buy and cut its price target to $70.00 from $75.00.

The bank opened a 90-day negative catalyst watch in anticipation of two key events: the expected release of SEC equity market structure rules in early 2024, and the Thinkorswim client conversion to the new Schwab platform in the first half of 2024.

While the analysts don't foresee the more impactful SEC rules, such as auctions, being implemented in their original form, the announcement of these rules could pose a headline risk to Schwab’s stock. This is particularly relevant considering the $90-100 million per quarter Schwab has been receiving in equity Payment for Order Flow (PFOF) in 2023.

We also see some risk related to the upcoming Thinkorswim client conversion to the new SCHW platform given expectations for other brokerage platforms to make a strong marketing push to capture some of these active traders.

Two more downgrades

Etsy (NASDAQ:ETSY) shares fell more than 1% pre-market today after Goldman Sachs downgraded the company to Neutral from Buy and cut its price target to $80.00 from $84.00.

According to the analysts, the downgrade primarily reflects a more balanced risk-reward ratio at Etsy's current market levels. Despite the change in rating, there is still a long-term belief in Etsy's unique positioning within the broader eCommerce sector. The expectation is that Etsy's Gross Merchandise Sales (GMS) will regain momentum, potentially reaching a high single-digit to 10% growth rate once the current challenges in discretionary online spending subside.

Zillow Group (NASDAQ:ZG) shares plunged more than 3% pre-market today after BofA Securities downgraded the company to Neutral from Buy with a price target of $60.00 (from $47.00).

The analysts noted that the downgrade is based on the belief that Zillow's stock currently reflects an anticipated steady recovery in the housing market for 2024, as evidenced by the over 40% year-over-year increase in its share price. Additionally, the analysts pointed out that near-record low home affordability could constrain the potential for volume growth, even with lower interest rates. Additionally, the ongoing real estate commission lawsuits present a significant challenge to Zillow's buy-side agent lead generation segment, which accounts for nearly half of the company's revenue.

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