According to Goldman Sachs, these two home tech names can be the hardest hit in the event of a severe recession. Both Apple and Hewlett Packard Enterprise stocks are at greatest risk in a bare-case scenario, according to a Tuesday note from an investment bank. Goldman Sachs is currently forecasting a gradual slowdown, with weakening consumer sentiment and corporate spending both expected to fall by nearly 20% this year, but continue to depress the value of the two tech stocks. I am. “Our consumer electronics coverage generally points out that there is the greatest downside risk to fundamentals when the deterioration in demand materializes compared to the basic case, but this Data points at the time of writing the article are consistent with shallow deceleration as well as economists Read the note “Current Forecast”. The note read that Apple’s big drop could mean a 22% and 33% downside to 2023’s earnings and earnings estimates compared to consensus estimates. Goldman Sachs assumed a 15% reduction in 2023 revenue in bare cases. The company, which has a neutral rating on Apple, has also lowered its 12-month price target from $ 157 to $ 130. Apple’s share price recently rose less than 1% to about $ 142. “We have lowered revenue forecasts in all segments and expect the Mac to continue to gain strong demand and market share,” the memo read. On the other hand, according to notes, the Hewlett-Packard bare-case scenario could mean a 38% downside compared to consensus estimates. Goldman Sachs assumed a 12% reduction in revenue in 2023 in a bare case scenario. Hewlett-Packard’s share price fell about 1.5% on Wednesday to about $ 12.63. According to notes, the slowdown will hurt two companies as consumer sentiment slumps and more people shift from goods to services in a post-pandemic recovery. Goldman Sachs expects high-end consumers, who have traditionally been resilient, to be hit over the years. Meanwhile, the company pointed out that retailers such as Target are shifting spending to out-of-home categories such as beauty and luggage. “Even if US high-end consumer sentiment remains relatively stronger than expected, we believe this change in wallet share means a decline in names exposed to consumers,” the memo said. read. Already, PC and smartphone sales forecasts are down, the memo said. Goldman Sachs predicts that PC units will decline 24% year-on-year in 2023 in bare cases and 10% in 2023 in base cases. Meanwhile, smartphone shipments are expected to decline 8% year-over-year in 2023 in a severe recession scenario and increase 4% in the base case. As Wall Street continues to discuss the timing and magnitude of the slowdown, investment banks are looking at the impact of a severe recession on equities. On Tuesday, the benchmark 10-year US Treasury yield fell below the 2-year yield. This is a reversal that many investors see as a warning sign that a recession is possible.
Goldman says these two tech stocks have the most to lose in a deep recession
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