KeyBanc Slashes Apple Stock Rating Due to Valuation Concerns

KeyBanc reiterates its Underweight rating on Apple stock due to concerns over valuation. The firm's data shows indexed spending rose 9% month-over-month, above the three-year average of 2%, but this is viewed as relatively neutral for Apple.

While KeyBanc considers near-term expectations for Apple reasonable, it maintains its Underweight rating due to worries that higher unit prices will slow user growth. This, in turn, could lead to slower Services revenue and investors paying a lower multiple for price-led growth compared to volume-led growth.

Apple currently trades at 34 times its price-to-earnings ratio versus a three-year average of 28 times, making valuation compression likely, according to KeyBanc. The firm anticipates that investors will pay less for the stock due to these concerns over user growth and valuation.