KeyBanc Downgrades Apple to Underweight on Rising Device Prices and Slowing Upgrade Cycles

KeyBanc downgraded Apple (AAPL) to Underweight from Sector Weight on July 14, citing higher device prices and weakening upgrade cycles as potential growth roadblocks.

The analyst stated that rising iPhone costs could lead US carriers to reduce device subsidies, causing consumers to hold onto their phones for longer periods instead of upgrading every two years.

According to KeyBanc, all three major US carriers have publicly discussed moving away from device subsidies, which would lower upgrade rates and extend device replacement cycles.

The bank also warned that expected price increases across Apple devices could slow the company's ability to expand its user base, weighing on its Services business.