On Tuesday, KeyBanc Capital Markets maintained its Underweight rating on Apple Inc. (NASDAQ:AAPL) with a steady price target of $200.00. The firm's analysis indicates that Indexed Spending for Apple was down 6% month-over-month, which is better than the three-year average decline of 9% for the same period. Year-over-year growth was observed at 7%, slightly down from the 8% growth seen in September.
According to the firm, the current spending data for Apple appears neutral, suggesting that the market's expectations may have shifted. Investors who were once optimistic about the potential success of the upcoming iPhone 16 and the associated upgrade cycle have seemingly tempered their enthusiasm. Despite this change in sentiment, KeyBanc suggests that consensus expectations have not yet been adjusted to levels that they consider appropriate.
KeyBanc further elaborates that the consensus forecasts for Apple's growth in fiscal years 2025 and 2026 may be overly optimistic. The firm predicts that low single-digit (LSD) hardware growth in fiscal year 2025 and low to mid single-digit (LSD-MSD) growth in fiscal year 2026 would be more realistic, as opposed to the market consensus, which anticipates mid single-digit (MSD) growth in fiscal year 2025 and high single-digit (HSD) growth in fiscal year 2026.
The analysis by KeyBanc suggests that the market's current projections for Apple's growth may be too aggressive and do not align with what the firm views as more reasonable expectations. As such, KeyBanc continues to advise caution regarding Apple's growth prospects in the coming years.
In other recent news, Apple Inc. has seen a flurry of analyst activity. MoffettNathanson reduced its price target for Apple to $202 from $211, maintaining a neutral stance. This adjustment reflects uncertainties regarding Apple's potential upgrades and the future of AI services. Meanwhile, UBS held its neutral rating, with a steady price target of $236, noting shorter wait times for high-end iPhone models. Evercore ISI reiterated its positive outlook, maintaining an outperform rating and a $250 price target for Apple. These are recent developments in the analyst landscape.
Regarding mergers, Apple and Arista Networks (NYSE:ANET) have been reaffirmed as top picks by Citi due to their strong market presence. Arista Networks reported a 20% year-over-year increase in revenue for Q3, reaching $1.81 billion, and anticipates a 15% to 17% revenue growth in 2025.
In other company news, Taiwan Semiconductor Manufacturing Co. (TSMC) is continuing its $65 billion investment in constructing new manufacturing facilities in Arizona. Arm Holdings (NASDAQ:ARM)' revenue forecast matched Wall Street expectations, resulting in a 4.5% decline in its stock price. The company expects third-quarter earnings per share to be in the range of 32 to 36 cents. These are the latest developments impacting these companies.
InvestingPro Insights
To complement KeyBanc's analysis, InvestingPro data reveals that Apple's revenue growth for the last twelve months as of Q4 2024 was 2.02%, which aligns with KeyBanc's cautious outlook on the company's growth prospects. This modest growth rate supports the firm's view that market expectations for Apple's future performance may be overly optimistic.
InvestingPro Tips highlight that 16 analysts have revised their earnings downwards for the upcoming period, further reinforcing KeyBanc's conservative stance. Additionally, Apple is trading at a high earnings multiple, with a P/E ratio of 37.6, suggesting that the stock may be overvalued relative to its current earnings potential.
These insights, along with 13 additional InvestingPro Tips, provide a more comprehensive view of Apple's financial position and market sentiment. Investors seeking a deeper understanding of Apple's prospects may find value in exploring the full range of tips and metrics available through InvestingPro.
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