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KeyBanc Capital Markets, a financial services firm, has lowered its rating on Apple. The company downgraded Apple from overweight to sector weight due to concerns about its high valuation and projected slow growth in the United States. The analyst, Brandon Nispel, explained that Apple’s stock is currently trading at high multiples and at a large premium compared to the Nasdaq. Nispel believes that in order for Apple’s shares to see an upside, the company needs to experience peak valuations or an increase in its growth profile.
Soft Growth Expected in the Americas
KeyBanc also anticipates soft growth in Apple’s primary market, the Americas. Nispel pointed out that about 37% of Apple’s revenue comes from the United States, and sales in this region are likely to struggle. Nispel forecasts a decline in the fourth quarter of 2023, marking the fourth consecutive year-over-year decline. He attributes this decline to lower phone upgrade rates and iPhone promotions that favor more expensive phone plans. Additionally, KeyBanc expects Apple’s revenue growth in fiscal year 2024 to be around 3.5%, lower than the consensus estimate of over 6%. Nispel predicts a 2.2% decrease in iPhone revenue in 2023, followed by a 2.1% increase in 2024. The analyst also mentioned that Apple’s margin improvement will likely be slower in the next few years.
Current Performance of Apple Shares
As of now, Apple shares have seen a significant increase of almost 33% year to date. However, KeyBanc’s rating downgrade reflects concerns about the company’s future performance and market conditions.
– Source: ‘s Michael Bloom contributed reporting
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Editorial Team
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