Apple Stock Downgraded on China Concerns

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"Evidence of a widespread demand reset from China is mounting," says Cowen analyst Timothy Arcuri.

Cowen analyst Timothy Arcuri on Wednesday downgraded his rating on Apple's stock from "outperform" to "market perform," citing concerns about consumer demand in China following the company's quarterly earnings report late on Tuesday.

He also cut his stock price target from $140 to $130, highlighting that "most targets are much higher."‎

"With a tepid iPhone number amid mounting China demand concerns and supply-side field work suggesting new iPhone builds are down cycle over cycle for the first time, we are downgrading Apple," he wrote in a report entitled "Every Rose Has Its Thorn." He concluded: "Evidence of a widespread demand reset from China is mounting."

"In time, we expect new service offerings will ultimately pull through meaningful hardware sales, but for the near and even medium-term, iPhone units remain the key driver for the stock," Arcuri explained. "On that front, our field work continues to suggest that builds are tracking down cycle over cycle for the first time in a new iPhone launch."

Apple Watch revenue and unit sales were not disclosed, but the analyst said "commentary implies about 2.5-3 million units, in-line with our model, but also disappointing versus Street [estimates of] around 4 million."

He trimmed his fiscal year 2016 financial forecasts for Apple slightly. The tech giant's stock had already dropped in after-hours trading due to guidance that disappointed Wall Street observers.

Twitter: @georgszalai