Key Banc downgrades Apple amid concerns price hikes will dampen demand
Investment bank KeyBanc Capital Markets will The company's stock rating was downgraded from "in line with the broader market" to "underweight" and set a target price of $250, on the grounds that iPhone price increases may suppress demand and the service business growth prospects are weakening. Affected by this, Apple's stock price fell more than 1.3% that day. Analyst Brandon Nispel pointed out in the report that Apple faces multiple risks. First, iPhone order growth is slowing and prices continue to rise, while operators in the US market are openly discussing reducing equipment subsidies, which may further extend users' replacement cycles and suppress terminal demand. Secondly, the market’s growth expectations for Mac, iPad and wearable devices in fiscal year 2027 are too optimistic, and there is a risk of downward revision. In addition, the report believes that the expansion of Apple's device user base is slowing down, which will directly put pressure on service business revenue. KeyBanc predicts that the growth rate of Apple's services business will slow down to about 7% in fiscal year 2027, which is far lower than the market consensus expectation of about 12%. Based on this, the bank believes that the market’s forecast of iPhone growth of 8% in fiscal year 2027 is too optimistic. KeyBanc also pointed out that based on its fiscal year 2027 forecast, Apple's current enterprise value and earnings before interest, taxes, depreciation, and amortization are approximately 24.5 times, and the price-to-earnings ratio is approximately 35 times. The stock price has been overvalued. KeyBanc's pessimistic stance is in contrast to the mainstream view on Wall Street, with most analysts still maintaining a "buy" or "hold" rating.