Investing.com -- KeyBanc Capital Markets analysts reiterated their Underweight rating on Apple (NASDAQ:AAPL) in a research note, citing "modestly negative" hardware trends and persistent concerns over valuation and revenue growth expectations.
KeyBanc said its proprietary Key First Look Data (KFLD) revealed a 6% month-over-month decline in November indexed spending, well below the three-year average of a 3% increase.
Year-over-year growth is said to have slowed to 6% in November, compared to 7% in October.
"We have seen no signs of iPhone 16 driving meaningful changes in upgrade activity," analysts noted, highlighting continued sluggishness despite new product launches.
KeyBanc also pointed out that Apple's F1Q25 guidance suggests low single-digit to mid-single-digit total revenue growth, with hardware growth projected at around 1% (+/- 3%).
While iPhone estimates remain in line at +2.2% year-over-year, forecasts for Mac (+1.8%), iPad (+2.4%), and Wearables (-2.6%) lag consensus.
The analysts raised concerns about Apple's premium valuation despite its slower growth profile compared to peers.
AAPL is trading at ~22.4x our 2026 adjusted EBITDA, versus the peer average of ~20.0x, they wrote, saying the stock "appears expensive."
Further, KeyBanc noted risks from potential cannibalization by the upcoming iPhone SE and a lack of historical precedent for Apple achieving revenue growth across all product lines and geographies.
While Apple stock has continued to climb, it has modestly underperformed the Nasdaq since KeyBanc's October downgrade. The analysts argue that consensus revenue estimates remain too high and suggest that investors reconsider expectations amid slowing hardware trends and competitive pressures.
"We continue to feel UW [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," they conclude.