In a rather unusual move compared to other analysts, Nomura Instinet has downgraded Apple's Stock from a "buy" to a "neutral", feeling that the tech giant's current valuation is a bit high compared to other iPhone cycles.
"Apple is certainly not the same company as it was five or even three years ago." analyst Jeffrey Kvaal said in a note to investors. "The growth in its services business is a particularly notable departure though hardly the only one. We do believe Apple's improvements merit a richer multiple than in prior years, though marginally so. We do not consider any of these sufficient, either individually or in aggregate, to flout the historical precedent."
In announcing the change in the stock recommendation, Kvaal also lowered the stock's target price from $185 to $175. Apple stock dropped about 1% to $174.24 on the news, but has slowly rebounded.
Apple current valuation, according to Kvaal, is 15 times estimated 2018 earnings. For the iPhone 6 cycle, the earnings multiple peaked also hit 15 times earnings, but then dropped to 9 times. For the iPhone 5, it hit 13 times earnings, then dropped to 8 times.
Apple has outperformed the S&P 500 this year, Apple is up 52%, while the index has only shown a 20% gain.
There are 38 securities companies that follow Apple stock, and 31 list it as a buy. The others have it as a hold, with none recommending sell. The last company to change its recommendation to hold was Mizuho Securities on June 11, but the stock has jumped 18 percent since then.
On Apple's most recent earnings call in November, the company reported a 12% increase in Q4 revenue year-over-year to finish out 2017. It also expects Q1 next year to be better than this year.