Key Banc downgrades Apple, worries about its growth prospects
Investment bank KeyBanc Capital Markets will The company's stock rating was downgraded from "in line with the market" to "underweight" and set a target price of $250, citing weak hardware demand in the U.S. market and overly optimistic market growth expectations for fiscal year 2027. Affected by this, Apple's stock price fell more than 1.3% on Tuesday. On the previous trading day, the stock had just hit an all-time intraday high of $323.45. KeyBanc analyst Brandon Nispel pointed out in the report that its proprietary data shows that the index of U.S. market spending fell by 2% month-on-month in June, well below the average growth of 9% over the past three years. This suggests that growth in the U.S. market is normalizing after an early release of demand triggered by last year's tariffs. The report cited a number of core risks: slowdown in iPhone order growth coupled with rising prices, weak replacement demand in the U.S. market and changes in operator subsidy models; market expectations for Mac, iPad and wearable devices in fiscal 2027 may need to be lowered; and the slowdown in the expansion of the device user base will put pressure on service business revenue. KeyBanc predicts that the growth rate of Apple's services business will slow to 7% in fiscal year 2027, which is far lower than the market consensus expectation of about 12%. The bank believes that the three major U.S. operators are openly discussing reducing equipment subsidies, which may lead to a longer user replacement cycle, and international market growth is facing challenges caused by iPhone price increases. Therefore, the market's general expectation of iPhone growth of 8% in fiscal year 2027 appears to be too optimistic. KeyBanc believes that based on its fiscal 2027 forecast, Apple's current enterprise value to earnings before interest, taxes, depreciation, and amortization is approximately 24.5 times, and its price-to-earnings ratio is approximately 35 times. The stock price is overvalued relative to its historical levels, and its stock price is overvalued relative to the S&P 500 Index and A premium of more than two standard deviations on the index is unreasonable. KeyBanc's pessimistic stance contrasts sharply with Wall Street's mainstream view. Data shows that among the 47 to 48 analysts covering Apple, only two to three have given an "underweight" or "sell" rating.