Apple shares received a rare "sell" recommendation. An analyst identified risks to demand

An analyst at KeyBanc Capital Markets has joined a small group of "bears" on Apple stock. He withdrew his “hold” recommendation and advised selling the stock, stating that the market expects too much from the company, according to Bloomberg . KeyBanc forecasts a slowdown in demand for iPhones and services and considers Apple’s stock valuation to be unreasonably high.

KeyBanc analyst Brandon Nispel downgraded Apple's stock from "neutral" to "sell" and set a price target of $250, which implies a decline of more than 20% from the closing price on July 13.

KeyBanc called the company’s stock valuation “unjustified.” Its price is more than 33 times its projected earnings, whereas the average multiple over the past ten years is 23, and the Nasdaq 100 index is currently trading at a multiple of 22.8.

The analyst explained his pessimism as follows: U.S. mobile carriers are cutting subsidies for smartphone purchases, which could lead to a slowdown in iPhone upgrade rates. Nispel believes that the consensus forecast of 8% growth in iPhone sales for fiscal year 2027 appears overly optimistic. Furthermore, price increases for Mac computers, iPads, and Apple home devices—intended to offset the rising cost of memory chips—also pose risks to demand for these gadgets.

“Combined with a slowdown in device sales growth, this will lead to weaker user base expansion and a decline in the growth rate of revenue from Apple’s services to 7% in fiscal year 2027 — compared to a consensus forecast of about 12%,” Nispel warned.

The downgrade underscores that Apple remains one of the least favored tech giants on Wall Street: fewer than 60% of analysts recommend buying its stock, Bloomberg notes. By comparison, Microsoft, Amazon, Meta, and Nvidia all have 90% buy ratings. Nevertheless, negative recommendations for Apple are rare: only four out of 52 analysts have issued them, according to MarketWatch.

At the same time, the iPhone maker’s stock leads the “Magnificent Seven” in year-to-date gains — they have risen nearly 17% and hit a new all-time high on Monday, July 13, driven by an inflow of investor funds from other segments of the technology sector, primarily from chipmakers’ stocks, according to Bloomberg. During trading on July 14, Apple’s stock price fell by about 1%.

Not all analysts consider rising gadget prices to be a significant risk for Apple. Samik Chatterjee of JPMorgan believes that investors’ concerns on this matter are exaggerated, and that demand for the company’s devices remains relatively resilient to price increases, as its customers are unlikely to stop buying them.

This article was AI-translated and verified by a human editor