Apple stock dips as KeyBanc downgrades on valuation, 'soft growth' outlook
KeyBanc analysts downgraded Apple (NASDAQ:AAPL) shares to Sector Weight from Overweight.
As a result, Apple stock traded 1.2% lower in early New York trading on Wednesday.
The downgrade call on Apple stock is based on several factors:
“We believe in order to justify upside to AAPL shares, peak valuations need to be applied or its growth profile needs to inflect higher,” the analysts said in a client note.
Moreover, key regions like the Americas are likely to see “soft growth.”
“~37% of AAPL's revenue comes from the U.S., making the U.S. APPL's largest geographic segment. We expect the U.S. to experience its fourth consecutive y/y decline in F4Q23, potentially carrying into F1Q24,” they added.
KeyBanc projects FY24 revenue growth of 3.5%, while the Street consensus sits at >6%.
“We also expect margins to improve at a slower pace in the next couple of years given: 1) product introduction and mix shift; 2) incremental hardware and services contribution margin pressure; 3) higher R&D and S&M for new product launches; and 4) potential for higher capex,” the analysts concluded.
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