Raymond James believes that Apple’s high valuation could limit near-term upside to a minimum. The bank resumed coverage of the iPhone maker at a marker perform rating. Prior to suspending its coverage of Apple, Raymond James rated the stock as an outperform. The firm did not assign the stock a target price. Shares of Apple have gained slightly more than 11% over the past 12 months, lagging the S & P 500’s 17% gain in that period. AAPL YTD mountain AAPL YTD chart Still, analyst Melissa Fairbanks thinks the stock is already trading at an expensive valuation. At least in the near term, she doesn’t see enough catalysts to drive further meaningful outperformance. “Despite strong fundamentals and improving product cycles, we believe Apple’s current valuation appropriately reflects these strengths, limiting near-term upside,” she wrote. “While we acknowledge the company’s leadership in consumer hardware, ecosystem, and services, with a highly sticky value proposition, we believe much of this value is already well understood by investors.” Fairbanks added that Apple’s existing broad user base of around 2.4 billion customers makes incremental gains from technology upgrade cycles more difficult to attain. To be sure, she wrote that Apple’s fundamentals remain strong, with upgraded features and capabilities supporting a healthy iPhone cycle. Fairbanks also applauded the traction of Apple’s Services business, and expects it to continue to be the primary growth driver going forward. “While we expect adoption of AI functionality at the edge to remain relatively limited in the near term, Apple’s ‘AI on device’ models, combined with its secure cloud processing, are poised to enhance key productivity applications and Siri across the new product lineup, expected to be a catalyst for a healthy upgrade cycle after a number of generally lackluster years,” she wrote.
