Apple shares extend slide; analysts worry about end to 'innovation pipeline'

SAN FRANCISCO — Apple shares continued a rare slide Monday, bringing its decline to 6.4% over the past two trading days on lingering concerns over the sustainability of its lofty stock price as well as a lack of dynamic new products.

Shares of Apple fell 2.5% to $145.32 after tumbling 3.9% Friday in a large sell-off of major tech stocks that included Facebook, Alphabet, Amazon and Microsoft.

The latest decline came after Mizuho Securities downgraded the stock to neutral from buy, and lowered its price target to $150 from $160.

"We believe enthusiasm around the upcoming product cycle is fully captured at current levels, with limited upside from here on out," Abhey Lamba, Mizuho managing director, Americas research, wrote in a note to investors Sunday. Lamba added near-term growth in China "is likely to remain weak" and estimates of 30% growth in Apple services revenue, per user, over the next two years "seems high."

Apple does not comment on analyst reports.

The downgrade is the second for Apple in two weeks — Pacific Crest reduced Apple from buy to neutral last week — though the stock is favored by a vast majority of more than 30 financial analysts tracked by S&P Global Market Intelligence. Apple shares are up 25% this year.

"No concerns on our end," says Angelo Zino, senior equity analyst at CFRA Research. "Most of it reflects the profit-taking occurring with the overall technology space after massive gains year-to-date. That said, we think the current sell-off represents an enhanced buying opportunity and maintain our strong buy opinion."

Mizuho is bullish the forthcoming iPhone 8 will be a big seller and drive revenue.

However, a sticking point could be an upgraded OLED screen with built-in fingerprint sensor that could reduce initial supply of the new iPhone after its expected launch in September, according to an investor note from RBC Capital Markets.

For some analysts, the issues may go deeper on Apple and technology.

Several point to last week's Apple Worldwide Developers Conference that, they claim, was light on products that could create new revenue streams — HomePod, Apple's voice-controlled speaker, being the exception.

"We may be staring at the end of Apple's disrupting innovation pipeline — and that's not pretty for anyone's stock price," says Holger Mueller, principal analyst at Constellation Research.

But Apple CEO Tim Cook told Bloomberg TV's Emily Chang last week it is focusing on self-driving technology. “We sort of see it as the mother of all (artificial intelligence) projects…It’s probably one of the most difficult AI projects actually to work on,” Cook said. “It’s a core technology that we view as very important.”

Follow Paste BN's San Francisco Bureau Chief Jon Swartz @jswartz on Twitter.