Apple stock (NASDAQ: AAPL) went on one of its biggest slides of the year after analysts downgraded the shares, saying the new iPhone 5C is not cheap enough for emerging markets and the company is failing to innovate.
Bank of America-Merrill Lynch downgraded Apple (AAPL) to “neutral” from “buy.” Similar actions were taken by analysts for Credit Suisse, Piper Jaffray and UBS.
Apple’s stock fell 5.7 percent, or $28, mid-day on Wednesday to $466.64.
During Tuesday’s highly-covered media event, Apple introduced two new phones with features such as a fingerprint sensor and new operating system, iOS 7. The new iPhone 5S comes in various metallic shades while the cheaper iPhone 5C comes in five plastic colors.
“You are going to be blown away by how rigid and great it feels in your hand,” said Phil Schiller, Apple’s vice president of marketing of the iPhone 5C at company headquarters in Cupertino, Calif.
UBS analyst Steven Milunovich downgraded Apple over concerns about its lack of competitiveness in growth markets, such as China, though he said he was “impressed by the specs of the 5S, the addition of NTT DoCoMo, and overnight news regarding China Mobile,” referring to the iPhone’s approval for use on China Mobile’s exclusive network.
“We were surprised by the high price of the 5C ($549/649) at just $100 under the 5S without a contract, leaving little differentiation. Apple said that two phones replace the old 5, leaving the 4S as the low-end option,” Milunovich’s research note stated.
A spokeswoman for Bank of America declined to comment further and noted that the firm’s research was proprietary. Credit Suisse and Piper Jaffray did not respond to requests for comment.