Apple (AAPL) -) shares edged higher in Wednesday trading after analysts at KeyBanc Capital Markets lowered their rating on the tech giant citing softer near-term iPhone sales and a muted upgrade cycle.
KeyBanc analyst Brandon Nispel cut his rating on Apple by one notch, to 'sector weight' from 'overweight' in a note published late Tuesday that cited the stock's recent premium to the Nasdaq benchmark and its near-peak valuations.
He also suggested that Apple's new iPhone 15, which it launched last month, could struggle to gain new customers as wireless carriers provide upgrade incentives that are only similar to those offered last year.
"We believe the 2020/2021 elevated levels of upgrade rates were a function of carriers promoting products in an effort to upgrade consumers to 5G," Nispel said. "Given the last several years have experienced elevated upgrades, we believe carriers' desire to upgrade consumers to the latest product is diminished."
"We expect the U.S. to experience its fourth consecutive y/y decline in F4Q23, potentially carrying into F1Q24," he added. "We're looking for FY24 revenue growth of 3.5% vs. consensus of >6% where we have a more muted view on revenue across all of AAPL's revenue segments."
Apple shares were marked 0.4% higher in mid-day Wednesday trading, against a 1.05% gain for the Nasdaq benchmark, to change hands at $173.06 each.
Apple's iPhone revenues have been in decline over two of the past three quarters, and indications from a host of rivals, as well as chipmakers and assemblers, suggest demand has been waning amid a pullback in consumer spending and persistently high inflation in major global economies.
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