Apple Inc. ( AAPL ) shares fell 1.9% on Tuesday due to the iPhone manufacturer's profit margin outlook falling short of expectations, which overshadowed its better-than-expected fourth-quarter results for the fiscal year 2026. With the release of the fourth-quarter financial report, KeyBanc analyst Brandon Nispel reiterated a sell rating on Apple stock and set a target price of $250.
The following are the reasons why KeyBanc holds a bearish view on Apple stock.
Nispel pointed out that Apple's revenue in the fourth quarter of fiscal year 2026 increased by 11.7% year-on-year, mainly driven by iPhone and Mac business revenues exceeding expectations. However, iPad and the revenue from wearable devices and services both fell short of expectations.
He added that Apple's guidance for a 7% to 10% revenue growth in the first quarter of fiscal year 2027 indicates that despite price increases, hardware sales growth is still slowing down. Nispel believes that this clearly shows a weakening in shipments. He also pointed out that Apple expects gross margin in the first quarter of fiscal year 2027 to be between 45% and 46%, which is lower than Wall Street's consensus forecast of 46.6%, due to rising memory costs.
In addition, Nispel indicates that Apple's guidance shows that the growth rate of service revenue in the first quarter of fiscal year 2027 will slow down to 8% to 9%. He believes that the slowdown in the service business seems to be more structural, and this situation may further deteriorate as unit sales weaken. The analyst also mentioned Apple's description of App Store, which is similar to the same period last year, as well as changes in monetization methods in some countries and the App Store operations under rulings by U.S. courts.
AAPL Should stocks be bought, held, or sold?
Overall, Wall Street's consensus rating for Apple's stock is 'moderate buy', based on 15 buys, 10 holds, and 5 sells. The average target price for the stock is $337.17, which suggests that the stock price may remain within a range of fluctuations around the current level. AAPL
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