Apple downgraded by LightShed on 'conservative' iPhone outlook, slowing Services
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Apple (NASDAQ:AAPL) shares were downgraded by investment firm LightShed Partners on Friday on worries over a "more conservative" outlook for iPhone sales and slowing Services growth.
Analysts Walter Piecyk and Joe Galone lowered their rating on Apple (AAPL) to sell from neutral, along with a per-share price target of $120, noting that they believe the replacement cycle for iPhones will continue to lengthen into 2024, citing several reasons, including fewer subsidies from carriers, longer-term phone payment plans, the increased used of eSIM, no "meaningful" 5G apps and potential economic weakness around the globe. 
"We believe Appleâs revenue miss last quarter was primarily driven by weaker demand from the lengthening replacement cycle and not supply issues, the popular narrative," the analysts wrote in an investor note. 
Looking at the carriers, the analysts said that AT&T (T) adopted a three-year payback period for smartphones on a limited basis two years ago and Verizon (VZ) recently copied that. It's expected that T-Mobile (TMUS) could do something similar, making the replacement cycle for Apple iPhones that much longer. 
Apple's (AAPL) growing Services business likely accounts for a significant chunk of the tech giant's valuation, but LightShed thinks that the assumption Services revenue will account for 24% of Apple's (AAPL) total revenue by 2025 is "aggressive," and it's unlikely that the stock will "re-rate" higher as a result.
Apple (AAPL) shares were fractionally lower in premarket trading on Friday.
On Thursday, Apple (AAPL) announced that its long-awaited Apple Music Classical app would be available for free to Apple Music subscribers later this month.
Analysts are largely cautious on Apple (AAPL). It has a HOLD rating from Seeking Alpha authors, while Wall Street analysts rate it a BUY. Conversely, Seeking Alpha's quant system, which consistently beats the market, rates AAPL a HOLD.