Apple (AAPL) Stock, Investment Warning Issued...Products Selling Out, but Stock 'Overvalued'

▲ Apple (AAPL), Foldable iPhone/AI Generated Image

Market expectations are growing for Apple's (AAPL) next-generation foldable device, 'Duo'. However, a warning has been issued that the stock has already reached a high valuation relative to its performance, which could limit its short-term upside potential.

According to Benzinga on September 21 (local time), Morgan Stanley analyst Erik Woodring assessed that the initial demand for the latest iPhone 18 Pro and Pro Max is robust. In an interview with CNBC, Woodring explained that the delivery waiting period for Pro models is about 2 to 4 weeks depending on the region, similar to last year. Despite Apple increasing production of its Pro lineup by approximately 18% in the second half of this year compared to the same period last year, the waiting period remains, indicating strong actual demand.

Regionally, the waiting period in the Chinese market was shorter than in previous years. Woodring analyzed that this is due to many Chinese consumers waiting for the foldable phone Duo, which is scheduled to be released in mid-October. He predicted, "Most of the Duo units Apple produces over the next 12 months will sell out," adding, "It will be an innovative device useful for travel, entertainment, and multitasking."

However, despite the anticipation for new products, stock valuation was identified as a significant burden. Woodring pointed out that Apple's stock price surged sharply ahead of the iPhone launch and is currently trading at a 'relatively rich' valuation. Apple's stock is currently trading at approximately 33 times its estimated earnings per share for fiscal year 2027 and 30 times for fiscal year 2028. This figure is very close to its past historical high multiples of 34-35 times.

The possibility of slowing growth in the services sector was also cited as a risk factor. Apple's services sector growth rate for the September quarter is expected to fall below 10% for the first time in several years. Woodring explained, "For the stock price to rise further, an upward revision of earnings estimates must precede it," adding, "If services growth slows more deeply than expected, it could exert downward pressure on valuation."

Expectations and concerns are mixed ahead of the launch of the next form factor, Duo. Market attention is focused on whether a rebound in the services sector and upward revisions in earnings can support breaking through the historical high stock multiple and surpassing the $344.50 resistance level.

[Article Key Summary]

-Morgan Stanley analyzed that demand for the iPhone 18 Pro remains robust, with production increased by 18% and delivery waiting periods maintained at 2-4 weeks.

-Anticipation for the foldable phone 'Duo', set to launch in mid-October, is high for a sell-out, but the stock's PER for fiscal year 2027 is 33x, close to its historical high (34-35x).

-The possibility of the services sector growth rate slowing below 10% has been raised, drawing attention to whether earnings estimates will be revised upwards to support further stock price increases.

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