KeyBanc Capital Markets cut its rating on Apple to Underweight from Sector Weight and established a $250 per share target in a research note on Tuesday, pointing to weakening hardware demand metrics and what it sees as optimistic 2027 growth expectations.
The downgrade was grounded in the firm’s proprietary spending dataset, KFLD, which KeyBanc said showed indexed spending declined 2% month-over-month in June. That result, the note said, sits well below a three-year average growth rate of 9% and constitutes "another month of below-trend growth." KeyBanc interpreted the pattern as evidence that Apple’s U.S. growth is "starting to normalize following last year's tariff-related demand pull-in."
Risks to device and services momentum
- KeyBanc highlighted several risks to the hardware cycle, including slowing iPhone builds in the face of price increases, weak upgrade activity in the U.S., and shifts in device subsidy models.
- The firm indicated that consensus expectations for 2027 may be too high for Mac, iPad and Wearables, and that slowing user-base expansion could exert downward pressure on Services revenue.
Analyst Brandon Nispel projects a material deceleration in Services growth, forecasting it to slow to 7% in fiscal 2027. That projection sits well below the consensus figure of roughly 12%, a gap KeyBanc attributes to an anticipated slowdown in unit growth across Apple’s device lineup.
Nispel also pointed to the role of carrier behavior, noting that U.S. carriers pulling back on device subsidies and a broader slowing of upgrade rates will place more of the demand burden on international markets. He warned that asking international demand to "carry more weight" becomes more difficult in a rising price environment. On that basis, KeyBanc described consensus iPhone growth assumptions of 8% for 2027 as "too aggressive."
Valuation concerns
On valuation, KeyBanc noted Apple is trading at approximately 24.5 times its fiscal 2027 EV/EBITDA estimate and around 35 times price-to-earnings. The firm characterized the stock as overvalued relative to its own historical levels and called Apple’s premium to the S&P 500 and Nasdaq "unwarranted."
Bottom line - KeyBanc’s downgrade to Underweight reflects a combination of below-trend spending data, risks to hardware upgrades and subsidy models, lower Services growth assumptions for 2027, and what the firm believes is elevated valuation.