Apple stock downgraded at Bank of America

Bank of America analyst Wamsi Mohan cut his rating on Apple Inc. shares AAPL, 0.21% to neutral from buy Wednesday, writing that he sees a more balanced risk-reward profile for the stock as it’s currently trading at its highest premium to the S&P 500 SPX, 0.57% in a decade. He sees margin risk heading into calendar 2021 given a higher bill of materials, driving up the cost of making 5G iPhones, as well as the potential for unit volumes to take a hit if Apple opts for higher retail prices to make up for the rising materials costs. Mohan also sees “tough compares in 2021 from an unsustainable trajectory (30% growth) of high margin App Store growth” and pressure on services gross margins due to content amortization costs. He raised his price target on the stock to $470 from $420 in conjunction with the downgrade. Apple shares are up 0.5% in Wednesday morning trading and they’ve gained 48% over the past three months as the Dow Jones Industrial Average DJIA, 0.97% has increased 13%.



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