The number of Apple bears just got smaller. MoffettNathanson upgraded the iPhone maker to neutral from sell. The firm was one of the few with a rare “sell” rating. According to FactSet, there are now at least two sell ratings left on the company. Analyst Craig Moffett’s rating change follows a sharp rally for the tech giant. While shares are down 4.8% year to date, they have jumped more than 17% over the past month as worst-case scenario risks tied to tariffs, lackluster artificial intelligence advancements and worries over Google’s lucrative deal with Apple have all either been resolved or overlooked by the market. The stock on Wednesday had its best day in more than a month, up 3.8%, after a federal judge ruled that Google can keep its Chrome browser. This benefits Apple as Google pays the company billions per year to be the default search engine on iPhones. “The worst-case scenarios are off the table,” Moffett said in a note to clients. “Discounting in China has diluted the share loss narrative. Exemptions have mitigated, and indeed almost eliminated, material tariff penalties (indeed, the very legitimacy of IEEPA “reciprocal” tariffs is now being challenged).” Moffett noted the stock remains expensive. He pointed out that Apple is trading at a roughly 20-year high in both absolute and relative terms to the market. Indeed, the stock trades at a forward price-to-earnings ratio of 32.36, per FactSet, well above the S & P 500’s 24.28 multiple. To him, the only way to justify the tech company’s valuation is that the market is being “overly optimistic” by counting on seeing forward growth from Apple that greatly exceeds its historical record. AAPL 1Y mountain Apple stock performance over the past year. “The mere fact that these acute risks have receded doesn’t make Apple especially attractive from a valuation perspective,” Moffett said in a note to clients. “North of 30x next year’s earnings is still, in our view, too rich for any company with good but not-great earnings growth. But as risks to fundamentals resolve, we don’t believe that a sell thesis solely supported by valuation concerns is justified.” Moffett’s $225 price target signals downside of 5.6% from Wednesday’s close.
