KeyBanc downgrades Apple to "Underweight" due to concerns over iPhone sales

October 25, 2024 10:51 PM AEDT | By Investing

Google News:

Recent News

Carney launches ‘One Canadian Economy’ Act to unify trade, approvals

Trump signs orders to enhance drone defenses, support supersonic trave...

US job growth in May tops forecasts, but Macquarie warns cracks are em...

U.S. Treasury, Commerce secretaries and Trade Representative to meet C...

Investing.com -- Analysts at KeyBanc have downgraded their rating of Apple (NASDAQ:AAPL) to "Underweight" from "Sector Weight," citing worries over sales of the tech giant's flagship iPhone device.

In a note to clients, KeyBanc analysts Brandon Nispel noted that a survey conducted by the investment bank showed demand for the lower-cost iPhone SE is "not purely additive" to overall sales of the smartphone.

Meanwhile, other data points suggest the rate of phone upgrades in the US is "unlikely to move higher" in the near term, Nispel said. Some strategists have predicted Apple could see an influx of customers upgrading their older devices to take advantage of recently-announced artificial intelligence-fueled capabilities in the new iPhone 16 model.

"Our survey shows that 59% of respondents are interested in upgrading to iPhone 16, which appears strong," Nispel wrote. "However, our survey also shows that of those respondents who are likely or extremely likely to upgrade to the iPhone 16, 61% are interested in the iPhone SE. We think this shows the iPhone SE is not incremental, and could possibly be cannibalistic to iPhone 16 sales."

Nispel argued that expectations calling for "Apple's highest growth in 3 [plus] years and a major inflection in all geographies and products" are unlikely to come to pass, adding such an increase has "rarely [...] occurred throughout history."

Finally, with Apple's shares trading at roughly 23 times 12-month forward earnings and a five-times premium over the tech-heavy Nasdaq Composite index, the stock "appears expensive relative to its history and peers," Nispel said. Apple's three-year average valuation is about 20 times forward earnings, while the Nasdaq's historical premium is 3 times, according to Nispel.

Apple shares were lower in premarket US trading.

Elsewhere on Friday, figures from researcher IDC showed iPhone sales in China dipped by 0.3% in the third quarter, while rival Huawei's devices spiked by 42%, underlining the intensifying competition in the world's biggest smartphone market.

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.