Apple's (AAPL) fiscal 2027 financial results could take a hit largely amid expectations of slowing product unit growth in the light of price hikes, KeyBanc Capital Markets said in a note e-mailed Tuesday.
The technology giant recently increased prices for MacBooks and iPads amid surging memory and storage chip costs.
"With Apple raising prices for iPad and Mac, and broad expectations for price increases on iPhone, we think this will likely put the unit growth outlook in slowing/declining territory," KeyBanc analysts Brandon Nispel and John Vinh said in a note to clients. "We think (that) given the correlation of Apple users to services, as unit volumes slow, so will the growth in Apple's services business."
The brokerage cut its fiscal 2027 net earnings expectations for the company to $9.08 a share from $9.30 and its revenue outlook to $502.48 billion from $502.62 billion. Wall Street is looking for $9.65 and $518.79 billion, respectively, according to the note.
KeyBanc downgraded its rating on the Apple stock to underweight from sector weight, with a $250 price target.
The company's shares were down 0.5% in Tuesday late-afternoon trade. The stock has jumped 16% so far this year.
"We see US carriers pulling back on device subsidies, slowing upgrade rates, and international likely needing to carry more weight, which gets difficult in a rising price environment where we think consensus iPhone growth of 8% in (2027) is too aggressive," Nispel and Vinh said.
However, Apple's near-term numbers appear "fine," the analysts wrote.
"Consumers are generally savvy shoppers for these types of products, and we suspect some pull-in of demand in the (near term), though our concerns become the level of elasticity of demand given the broad range of price increases that Apple is pushing through the system to protect margins from higher costs," Nispel and Vinh wrote.
The company is scheduled to report third-quarter results July 30.
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