‘Walk Away’: Why KeyBanc Has Now Turned Bearish on Apple Stock

Apple (NASDAQ:AAPL) stock saw out Monday’s trading notching a new all-time high, following reports that the tech giant might be bucking the trend. iPhone shipments increased by 3% on a year-over-year basis in Q2, allowing Apple to capture a record 20% share of global smartphone shipments despite an industry-wide decline. Overall market shipments fell as the memory shortage drove up component costs, putting pressure on lower-priced devices.

However, if that sounds like a bullish setup for Apple, think again. With the stock now sitting at elevated levels, KeyBanc analyst Brandon Nispel believes the outlook for the tech giant is not as rosy as it is made out to be.

In fact, Nispel has now taken a bearish stance on Apple’s prospects, downgrading his rating from Sector Weight (i.e., Neutral) to Underweight (Sell). Nispel’s $250 price target implies the stock is overvalued by 21%. (To watch Nispel’s track record, click here)

While the stock got a boost from some promising data, Nispel’s findings tell a different story. The investment firm’s KFLD (Key First Look Data) suggests that U.S. demand is beginning to normalize after last year’s tariff-related pull-forward. Indexed spending declined 2% month-over-month in June, below the three-year average increase of 9%. For Q2, indexed spending fell 2.7% sequentially (albeit better than the three-year average of -3.7% QoQ) and 3% YoY, compared with a 6% YoY increase in Q1.

The analyst believes the weaker U.S. trend contrasts with Apple’s expected hardware growth, suggesting strength is likely coming from China and other international markets. Historically, Apple’s fiscal third-quarter hardware revenue declines nearly 10% sequentially, but consensus assumes a much smaller decline this year (-4.3%). The analyst argues current expectations are too optimistic given the underlying demand trends.

Looking at the bigger picture, Nispel raises several concerns. One being that U.S. carriers are reducing device subsidies, which could slow upgrade cycles, while international growth will need to offset weaker U.S. momentum. However, rising iPhone prices could make overseas growth more challenging. Nispel views consensus iPhone growth expectations of 8% for FY27 as too aggressive and sees risks to Mac and iPad estimates following recent price increases.  

Slower hardware unit growth could also pressure Services growth, which the analyst expects to decelerate to 7% in FY27 vs. Street expectations of around 12%. “With Apple trading at ~24.5x our FY27 EV/ EBITDA and ~35x P/E, we think the stock is overvalued relative to history and see its 2+ standard deviation premium to the S&P 500/Nasdaq as unwarranted,” Nispel summed up.

So, that’s the KeyBanc view, but what does the rest of the Street have in mind for Apple? One analyst joins Nispel in the bear camp, but with an additional 18 Buys and 10 Holds, the stock claims a Moderate Buy consensus rating. Going by the $324.23 average price target, the shares will stay rangebound for the time being. (See Apple stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.