KeyBanc Capital Markets on Apple (NASDAQ:AAPL)

KeyBanc Capital Markets analysts have reiterated their Underweight rating on Apple, citing modestly negative hardware trends and ongoing valuation concerns amidst revenue growth expectations.

According to their proprietary Key First Look Data (KFLD), a 6% month-over-month decline in November indexed spending was noted, which falls well below the three-year average increase of 3%.

Year-over-year growth has also slowed to 6% in November, down from 7% in October.

The analysts remarked, “We have seen no signs of iPhone 16 driving meaningful changes in upgrade activity,” indicating ongoing sluggishness despite recent product launches.

KeyBanc highlighted that Apple’s F1Q25 guidance suggests low single-digit to mid-single-digit total revenue growth, with an estimated hardware growth of around 1% (+/- 3%).

While iPhone estimates are in line at +2.2% year-over-year, projections for Mac (+1.8%), iPad (+2.4%), and Wearables (-2.6%) are lagging behind consensus expectations.

The analysts expressed concern over Apple’s premium valuation, noting that it trades at approximately 22.4x their 2026 adjusted EBITDA, compared to the peer average of 20.0x, calling the stock expensive.

Additionally, KeyBanc warned of potential risks from the upcoming iPhone SE and noted the lack of historical precedent for Apple achieving revenue growth across all product lines and geographies.

Despite a rise in Apple stock, it has slightly underperformed the Nasdaq since the downgrade in October. The analysts argue that consensus revenue estimates are likely too high and recommend that investors adjust their expectations in light of slowing hardware trends and competitive pressures.

In conclusion, the analysts state, “We continue to feel Underweight AAPL is best given:

1. Still meaningful potential for revenue growth estimates to reset lower; and
2. AAPL's premium valuation despite its lower growth profile compared to peers.”