Apple stock receives rare negative rating, investment bank warns current valuation is too high and growth is under pressure

Apple stock receives rare negative rating, investment bank warns current valuation is too high and growth is under pressure.

Apple received a rare negative rating: Investment bank KeyBanc Capital Markets downgraded Apple's stock rating to "underweight", citing concerns about its demand outlook and valuation levels. KeyBanc analyst Brandon Nispel previously gave Apple stock the equivalent of a "hold" rating.

His latest statement is that Apple’s current valuation relative to the overall market “lacks a reasonable basis.” Apple currently trades at a forward price-to-earnings ratio of more than 33 times, well above the average of the past 10 years (23 times) and higher than the Nasdaq 100's price-to-earnings ratio of about 22.8 times.

Nispel wrote in the report: "We believe that US operators are reducing equipment subsidies, which will drag down the speed of user replacement; at the same time, the international market may need to bear more growth pressure.

But in a rising price environment, this will become more difficult." "We believe the market's consensus expectations for Apple's fiscal 2027 iPhone sales growth of 8% are too aggressive." The downgrade further highlights that Apple is one of the least favored stocks among large technology stocks by analysts.

According to data compiled by the media, less than 60% of analysts tracking Apple recommend buying. By comparison, about 90% of analysts covering Microsoft, Amazon, Meta and Nvidia have "buy" ratings on these stocks. But it should be noted that negative ratings are still very rare for Apple.

Currently, only about 7% of institutions, including KeyBanc, have given Apple a negative rating equivalent to "bearish". Apple shares closed at a record high of $317.31 on Monday, essentially the same as analysts’ average target price of $319, meaning the market generally expects limited upside over the next 12 months.

The target price given by KeyBanc is only $250, which means there is more than 20% downside from Monday's closing price. As of press time, Apple's stock price fell more than 1% intraday on Tuesday. However, Apple's performance this year has remained strong, with a cumulative increase of nearly 16%, making it the best-performing stock among the "Big Seven".

Apple is also benefiting from this rotation as investors pull money out of other areas of the technology sector, especially semiconductor stocks. Last month, Apple raised the prices of Macs, iPads and smart home devices to offset cost pressures caused by rising memory chip prices.

KeyBanc pointed out that due to product price increases, revenue expectations for the Mac and iPad businesses are at risk of downward revision.

Nispel said: "When slowing product sales growth is combined with rising prices, it will lead to a deceleration of user growth and push Apple's services business growth to slow to 7% in fiscal 2027, significantly lower than the market consensus of approximately 12%." (

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