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Shares of Apple (NASDAQ: AAPL) are down 13% year to date. The company is facing several headwinds right now, including weak iPhone sales in China and increased regulatory scrutiny in the U.S. and Europe.

Despite these headwinds, Wells Fargo has an overweight (buy) rating on the shares with a $225 price target. That's 35% higher than Apple's current share price of $166.90.

Is Apple stock a buy?

In the company's fiscal 2024 first quarter (ended Dec. 30, 2023), iPhone sales grew in every region except China. But analysts expect Apple to report a 5% year-over-year decline in revenue for the fiscal second quarter.

Apple is expected to launch generative artificial intelligence (AI) features for iOS later this year, which could stimulate iPhone demand, but investors are worried about the cost of these new features. Analysts expect Apple to post earnings per share of $1.50 for fiscal Q2, slightly down from $1.52 in the year-ago period.

Another cloud hanging over Apple stock right now is regulation. In March, the Department of Justice filed a lawsuit alleging that Apple is monopolizing the smartphone market with certain contractual restrictions placed on app developers. Meanwhile, the European Union is trying to force Apple to offer users alternative ways to buy content in the App Store.

Overall, these headwinds may continue to negatively impact investor sentiment around the stock in the near term, but these issues don't impact the value of Apple's brand.

The stock's valuation still isn't cheap on a price-to-earnings basis, and with Apple likely facing another quarter of soft iPhone sales, investors shouldn't expect the stock to reach the analyst's price target anytime soon. However, stronger iPhone sales in calendar 2025, especially if Apple releases new AI features, may be the catalyst that sends the share price higher.

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Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.