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On Friday, KeyBanc analysts reiterated a Sector Weight rating for Apple stock (NASDAQ: NASDAQ:AAPL), the $3 trillion market cap technology giant that generated over $400 billion in revenue last year. The decision comes after reviewing the latest May KFLD data, which indicated indexed spending was down 1% month-over-month, slightly better than the three-year average decline of 2%. Year-over-year spending increased by 22%, compared to a 38% rise in April.
KeyBanc analysts noted that the strength observed in May suggests a continuation of the demand pull forward first noticed in April. The month-over-month spending trends for May align with historical averages, but from a higher base. This suggests iPhone and hardware revenue strength relative to past periods, which is being factored into their estimates. According to InvestingPro data, Apple’s revenue growth stands at 4.91%, with the company maintaining strong profitability metrics and a GOOD overall financial health score.
The analysts also highlighted that trends up to May appear healthy, with encouraging carrier commentary on upgrade rates and gross additions. This suggests that their estimates for Apple might be conservative.
Despite these positive indicators, KeyBanc analysts expressed caution, stating that they do not see sufficient upside to become overly enthusiastic. They pointed out that Apple’s current valuation, at approximately 19.7 times their projected 2026 adjusted EBITDA, remains expensive relative to its growth, compared to the three-year average of about 21 times. This aligns with InvestingPro’s analysis, which indicates Apple is currently overvalued, with the stock trading at an EV/EBITDA multiple of 21.33x and a P/E ratio of 31.28x. For deeper insights into Apple’s valuation and 12+ exclusive ProTips, visit InvestingPro’s comprehensive research report.
In other recent news, Apple has been the focus of several analyst reports, highlighting the company’s financial performance and strategic positioning. UBS maintained a Neutral rating on Apple, setting a price target of $210, following an analysis of Apple’s App Store performance, which showed a 13% year-over-year revenue growth in May. Morgan Stanley (NYSE:MS) also maintained its Overweight rating with a $235 target, noting the App Store’s 10% year-over-year growth in the U.S. and suggesting a potential $110 million upside in Apple’s June quarter services revenue if trends continue. However, Needham downgraded Apple from a Buy to a Hold due to valuation concerns, citing Apple’s high forward P/E ratio and competitive pressures from tech rivals.
Evercore ISI reiterated an Outperform rating with a $250 target, discussing Apple’s strategy to introduce AI capabilities and a new gaming app, while predicting a low-key Worldwide Developers Conference. Meanwhile, TD Cowen maintained a Buy rating with a $275 target, expressing optimism about Apple’s potential in generative AI and projecting significant earnings growth if Apple successfully integrates AI advancements. These developments reflect a diverse range of analyst perspectives on Apple’s future, with some emphasizing growth opportunities in AI and others voicing concerns over valuation and competition.
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