The firm's survey of affluent Chinese consumers reflects "clear evidence" of a shift away from Apple and toward competitors like Huawei and Samsung.
The results led HSBC to write its third cautious Apple report in as many months, and caused the bank's analysts to slash their 2019 earnings-per-share estimates for the tech giant from $12.67 to $12.19.
"While we see reasons for Apple continuing to compound in the US, we believe that emerging markets will remain a question mark unless there is a sizeable shift in strategy and we also believe that Europe is at risk of slippage in terms of market share as more value for money propositions, notably from Chinese players, gain in relevance," analysts led by Erwan Rambourg told clients Tuesday.
Respondents who already owned iPhones were relatively less likely to choose Apple as their next smartphone brand. Additionally, Huawei was the most popular choice as to which smartphone brand respondents would buy next.
HSBC reiterated its "hold" rating and $160 price target 7.5% below where shares were trading Wednesday and said Apple's healthy cash flow had kept it from turning completely bearish just yet.
Elsewhere in the survey, Chinese consumers showed little appetite for smartphones priced at more than $1,200, and said they may be more inclined to upgrade their smartphone faster with improvements to memory and battery life.
HSBC initially lowered its Apple recommendation from "buy" to "hold" and cut its price target back in early December .
That was prior to the iPhone giant's pre-announcement in early January that its revenue would come in lower than previously forecasted due mostly to iPhone weakness in Greater China but after other Wall Street firms and suppliers had sounded the alarm on an iPhone slowdown. Goldman Sachs, for example, slashed its price target three times in November alone.
Apple reported quarterly earnings results last month that were in line with what Wall Street analysts had expected, even coming in slightly better than feared. After all, the tech company had already lowered its expectations , setting up for an earnings report that featured no surprises . Still, analysts advised clients that challenges like slowing iPhone sales and weakness in China weren't going away.
In HSBC's Tuesday note, analysts said China still remains one of the most profitable regions for Apple "despite volatile trends over the last three years," and noted the country represented nearly 20% of the company's total revenue in 2018.
Although Apple shares are trading 26% below their all-time high last October, they've risen 18% so far this year.
