Apple's stock falls to lead Dow losers; analyst sees need for aggressive iPhone price cuts and 'significant' M&A

Shares of Apple Inc. dropped 1.9% in morning trade Monday, enough to pace the Dow Jones Industrial Average's decliners. Wedbush Morgan analyst Dan Ives reiterated his outperform rating and $200 stock price target, which is about 34% above current levels, but said Apple has to "aggressively" cut prices in China on its iPhone XR to boost lagging sales and that a "significant" video content acquisition is needed soon. He said the XR price cuts are needed to pull forward roughly 15 million to 20 million iPhones that would otherwise sit idle, waiting for the next release, or worst case, move to lower-priced competition. And while Apple is counting on its services business for future growth, it is currently "playing behind the eight ball in this content arms race" with competitors including Netflix Inc. , Walt Disney Co. and AT&T Inc. . "While acquisitions have not been in Apple's core DNA, the clock has struck midnight for Cupertino in our opinion and building content organically is a slow and arduous path, which highlights the clear need for Apple to do larger, strategic M&A around content over the coming year to 'double down' and drive the services flywheel," Ives wrote in a note to clients. Apple's stock has tumbled 32.7% over the past three months, while the Dow Jones industrial Average has slipped 5.8%.

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