Why Apple Stock Lagged the Market on Monday

Key Points

• A global bank maintained its equivalent of a sell recommendation in a new research note.

• It enumerated three reasons not to buy the stock.

• 10 stocks we like better than Apple ›

An Apple (NASDAQ: AAPL) bear weighed in on the monster tech stock Monday morning, and it seems at least a few investors were taking its latest analysis to heart. They unenthusiastically traded the company's stock that session, weakly pushing it only 0.5% higher. Meanwhile, the benchmark S&P 500 index closed the day 1.5% in positive territory.

Barclays is quite the bear

In its new Apple take, Barclays reiterated its existing underweight (read: sell) recommendation on the iDevice maker. This, despite enacting a slight raise in its price target to $180 per share from the preceding $173.

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According to reports, Barclays' continued pessimistic outlook on Apple stems from three key factors.

The first is the inherent weakness in the company's foundational hardware business. Growth in such products has been modest, and the bank's analysts pointed out that the seemingly robust growth in the company's just-reported fiscal third quarter was due to factors such as forward purchasing ahead of anticipated tariffs.

The second is China, a crucial market for Apple. Barclays believes that intensifying competition will threaten the company's market share in the sprawling Asian nation.

Concerned about regulators

Finally, the bank is wary about potential regulatory difficulties Apple might have in its Apple Services segment. With increased scrutiny and regulatory action around app marketplaces like the App Store, the company could be hit with rulings that reduce its take from this lucrative revenue stream.

Last week, Alphabet's Google suffered a notable legal defeat when its appeal against an unfavorable ruling in a case centered around its Google Play was rejected. Both regulators and courts seem to find the highly advantageous conditions of marketplaces like Google Play and the App Store distasteful.

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Eric Volkman has positions in Apple. The Motley Fool has positions in and recommends Alphabet and Apple. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.