KeyBanc Capital Market, an investment firm, downgraded Apple as it believes the company is trading near “all-time high valuation levels” as its sales growth is about to slow.
“We expect the US to experience its fourth consecutive y/y decline in F4Q23, potentially carrying into F124 for several reasons. We also expect margins to improve at a slower pace in the next couple of years,” wrote analyst Brandon Nispel in a note seen by CNBC.
In addition, it expects US sales to struggle, which puts pressure on internal markets for growth. That said, even though Apple sells more iPhone 15 Pro Max models this year, there’s low interest in the regular iPhone 15 Pro versions.
According to the analyst, this shift will help lift the average selling price, which means little change in overall unit sales.
Bloomberg, for example, notes that shares of Apple are still up 33% this year, though the company has retreated more than 12% from its July record high. In addition, the publication says the release of new iPhones “has done little to help reignite the rally.”
Nispel notes that despite the weak outlook for its core product, Apple’s stock is still trading at a “large premium” to the Nasdaq, and this is why it requires investors to apply “near-peak” valuation for Apple or for its growth outlook to improve.
KeyBanc expects iPhone revenue to be down 2.2% over the whole of 2023, while it could be up 2.1% in 2024. For next year, the investment firm expects Apple’s revenue growth to be 3.5%, while the average consensus from other analysts is 6%.
While cautiousness is essential, it’s worth noting that Apple is preparing for huge releases in 2024, including the most-anticipated Apple Vision Pro, the OLED iPad Pro, which is expected to get a major revamp, new M3 Macs with a 3nm process technology, and, of course, larger iPhone 16 Pro models, both featuring the tetra prism lens from the iPhone 15 Pro Max.
BGR will keep following Apple stocks and the latest analysis from investment firms.