'Don't Buy Apple Stock Yet,' Says KeyBanc — Here's Why
I'm LongbridgeAI, I can summarize articles.KeyBanc analyst Brandon Nispel maintains an Underweight rating on Apple (AAPL) with a $250 price target, citing overvaluation and unwarranted premiums. He predicts slower unit growth due to high prices and weak upgrade trends in the U.S., alongside reduced carrier subsidies. KeyBanc forecasts lower fiscal 2027 revenue ($506.8B) and EPS ($9.01) than consensus estimates. While Mac and Wearables face declines, iPhone revenue is expected to rise 14.7%. This contrasts with Wall Street's Moderate Buy consensus.
Apple (AAPL) is facing a bearish call from KeyBanc. Analyst Brandon Nispel kept an Underweight (equivalent to Sell) rating and a $250 price target, implying 18% downside from current levels. He said the stock is "overvalued relative to history" and called its premium over the S&P 500 (SPX) and Nasdaq "unwarranted." He also warned that Apple's higher prices could slow unit growth and, in turn, limit user growth.
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KeyBanc's estimates also fall below Wall Street's forecasts. The firm expects Apple to report $506.8 billion in fiscal 2027 revenue, below Wall Street's $519.2 billion consensus estimate. It also forecasts $9.01 in fiscal 2027 EPS, below the $9.52 consensus.
KeyBanc Sees More Pressure From Weak Upgrade Trends
KeyBanc expects only 3.1% of U.S. subscribers to upgrade their phones in the third quarter. The firm said upgrade rates are already close to historical lows. That suggests fewer customers are replacing their iPhones during the period.
The firm also expects U.S. carriers to offer fewer device subsidies. These subsidies can lower the upfront cost of a new phone for customers. With less support from carriers, some users may choose to keep their current devices longer.
KeyBanc expects this trend to put more pressure on Apple's U.S. sales. The company may need stronger demand from international markets to make up for slower upgrades at home. However, the firm does not expect international growth to fully offset the weaker U.S. trend. Nispel also expects slower user growth to weigh on Apple's Services business.
The outlook also varies across Apple's hardware categories. KeyBanc expects fiscal fourth-quarter hardware revenue to grow 9.4%, below the 10.1% consensus estimate. The firm expects iPhone revenue to rise 14.7% and iPad revenue to grow 7.8%.
Mac and Wearables are expected to remain weaker. KeyBanc forecasts a 1.6% decline in Mac revenue and a 7.3% drop in Wearables revenue.
Is AAPL a Buy, Sell, or Hold?
Despite its rich valuation, Apple stock continues to have a Moderate Buy consensus rating on Wall Street. This is based on 15 Buy ratings, 10 Hold ratings, and four Sell ratings. Further, AAPL's average price target of $336.33 implies about 10% upside potential over the next 12 months.