Investing.com -- KeyBanc Capital Markets warned in a note Friday that January spending data for Apple (NASDAQ:AAPL) was weaker than expected, signaling potential downside risks for the company’s hardware business.
The firm reiterated its Underweight rating on the stock, citing slowing growth, increasing competition, and a valuation that appears stretched.
KeyBanc’s Key First Look Data (KFLD) showed indexed spending on Apple hardware fell 40% month-over-month (M/M) in January, below the three-year average decline of 36%. Year-over-year (Y/Y) spending growth slowed to 6%, down from 7% in December.
“We find the data to be negative, given it was seasonally weaker and decelerated on a y/y basis,” analysts wrote.
Looking ahead, KeyBanc believes Apple’s second fiscal quarter (F2Q25) could see below-average hardware growth.
The firm noted that historically, Apple’s hardware revenue declines 27% quarter-over-quarter (Q/Q) in F2Q, but current consensus expects a steeper 30.9% drop. KeyBanc’s estimate is even lower, at negative 32.6% Q/Q.
Apple’s F2Q25 guidance suggests total revenue growth in the low-to-mid single digits, with services expected to post double-digit gains.
However, KeyBanc argues this implies hardware revenue growth of only 0% +/- 2%, significantly below historical trends. The firm’s estimates for Mac sales (+6.3% Y/Y) are in line with consensus, but iPhone (-3.5% Y/Y), iPad (+8.2% Y/Y), and Wearables (-2.2% Y/Y) are all slightly weaker.
KeyBanc maintains a cautious stance on Apple, citing concerns over muted iPhone 16 demand, potential cannibalization from the iPhone SE, increased competition in China, and regulatory challenges in Indonesia.
With Apple trading at 22x projected 2026 EBITDA versus a peer average of 17x, analysts argue the stock remains expensive given its "inferior growth."