Apple Inc. (NASDAQ: AAPL) is still the darling of Wall Street and Main Street. This company has been able to enthrall consumers and the media with its products, and now it is the largest company in the world by market cap and profitability. Apple’s greatness is not being challenged, but investors are starting to wake up to the notion that they just might have to accept some more realistic growth levels for 2016 and beyond.

24/7 Wall St. has found it impossible to ignore the drop in Apple’s stock in December. Though down over 1% so far in 2015, it is down over 4% in the past week and down over 9% in the past month. Most investors expect that each December is supposed to come with a Santa stock market rally. Well, it turns out that analysts have been tempering expectations ahead, and it is becoming more evident that many of those massive bullish price targets might need to come down going into 2016.

A lot of things happened in 2015 for Apple. The launch of the Apple Watch was more of a niche product, and the new refreshes for the iPad have yet to materially work into big gains in sales. Still, the iPhone 6 carryover and the iPhone 6s refresh have been huge for Apple. Streaming music has yet to materialize into a massive boost, and the verdict is out for Apple TV.

Shortly before Christmas, Apple shares were trading at roughly $107.00. This is against a 52-week range of $92.00 to $134.54. What really stands out here is that Apple’s consensus analyst price target is all the way up at $148.98 at this time. Sure, we are talking about Apple, but this just still feels too high.

When analysts give a new upside price target with their Buy and Outperform ratings, investors generally can expect implied upside of 8% to 15%. For the mighty Apple, maybe that would be 20% or as much as 25% because it is Apple and being cautious on Apple just isn’t cool to the fanboys. Still, the consensus price target of $148.98 would imply just over 40% in upside for Apple in 2016, if you add in the 1.9% dividend yield.

Calling for 40% upside is usually too much for new analyst Buy and Outperform ratings in very well-established stocks. If we pretend that Apple shares were back up at $120 or higher, then the consensus price target is still almost 25% higher, before considering the dividend.

24/7 Wall St. has gone over some of the more tempering analyst calls of late, and we have covered some of the more positive calls to keep a better balance here. Very few outright analyst downgrades have been seen on the formal ratings. That isn’t true on analyst target prices and iPhone shipment/sales estimates. After all, there is no assurance that analysts will lower their price targets on Apple.
Some of the more tempered analyst calls and observations from the trailing 10 days or so were as follows:

• Barclays kept its Overweight rating, but it also trimmed its price target to $150 from $155, based on more modest iPhone estimates.
• Bank of America Merrill Lynch kept its Neutral rating and $130 price objective, but it cut its iPhone unit sale estimates for the first calendar quarter of 2016 to 51 million from 58 million.
• Cowen has a Market Perform rating and lowered its target to $130 from $135.
• Credit Suisse lowered its iPhone estimates but kept its Outperform rating and $140 price target.
• Morgan Stanley trimmed its iPhone expectations for December and for 2016, and while it kept an Overweight rating it lowered the target to $143 from $152.
• RBC Capital says that supplier concerns could be a negative factor for Apple on the iPhone. The firm maintained its Outperform rating but went to a $140 target from $150.
• Robert W. Baird lowered its price target to $150 from $155, based on lower iPhone and earnings per share (EPS) targets.
• UBS lowered its price target to $130 from $140, while lowering the December iPhone estimates to 75 million from 78 million and trimming Apple’s 2016 EPS target to $10.05.

So, it is important to consider the more bullish calls as well. Piper Jaffray’s Gene Munster remains one of the top Apple cheerleaders. Munster has an Outperform rating and a whopping $179 price target.

Citigroup was another positive force when Apple shares were closer to $116. It reiterated its Buy rating and its $145 price target, noting that Apple still has plenty of room for growth.

BMO Capital markets had initiated coverage with an Outperform rating and assigned a $145 price target.

Goldman Sachs recently reiterated its Buy rating, which is after adding Apple to the Conviction Buy List in November, when it kept a $163 price target. The Goldman Sachs call was based more on the transition to an ecosystem model for subscriptions and refreshes rather than just for new iPhone and hardware sales.

Apple’s Tim Cook was also given many reviews (some unfavorable) on the treatment of overseas capital. Of course this is populism attacking corporate tax rates and taxes paid, but Apple still gets questions about its overseas labor practices.

Apple is also a leader in share buybacks. Sure, this was pressured by activists and Apple’s cash balance is larger than the treasury of most of the world’s nations. Is buying back stock a better way of growing a company than buying new growth avenues? Maybe in current EPS, but what about long term?

Apple was also added into the Dow Jones Industrial Average early on in 2015. That sounds great on the surface, but historically being added to the Dow is not always immediately followed by massive share gains.

The reality is that making any cautious comments on Apple comes with a backlash. The public just loves Apple, and its $600 billion market cap should speak for itself. It seems a safe bet that analysts will continue to trim their price targets on Apple ahead. At least that seems the case, unless Apple gets a serious Santa rally between now and the end of the year.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.