Apple Inc. received an upgrade this week after MoffettNathanson shifted its rating on the iPhone maker to neutral from sell.
The move reduces the already small pool of Wall Street analysts maintaining a bearish stance on the company.
According to FactSet data, only two “sell” ratings remain among analysts covering the stock.
The change comes as Apple shares have staged a strong rebound, climbing sharply in recent weeks even as broader concerns about valuations and growth prospects persist.
Rally drives shift in outlook
Analyst Craig Moffett’s rating revision follows a sharp rally for Apple.
While Apple shares are still down 4.8% year to date, the stock have gained more than 17% over the past month.
On Wednesday, Apple posted its best single-day performance in over a month, closing 3.8% higher.
Several factors contributed to the turnaround. Fears tied to tariffs, lackluster progress in artificial intelligence, and potential risks to Apple’s lucrative relationship with Google have either been resolved or discounted by investors.
This shift in sentiment has helped ease concerns that previously weighed on Apple’s valuation.
Apple also stands to benefit from a recent legal ruling that allows Google to retain its Chrome browser.
As part of their longstanding deal, Google pays Apple billions of dollars annually to remain the default search engine on iPhones, providing a steady source of high-margin revenue.
“The worst-case scenarios are off the table,” Moffett wrote in a note to clients.
He highlighted that discounting in China has softened fears about iPhone market share losses, while exemptions have largely eliminated tariff penalties.
He also pointed out that the legitimacy of certain reciprocal tariffs under the International Emergency Economic Powers Act (IEEPA) is now being challenged, further reducing potential risks.
Valuation concerns remain
Despite the upgrade, Moffett emphasized that Apple’s stock remains expensive.
At a forward price-to-earnings ratio of 32.36, Apple is trading well above the S&P 500’s multiple of 24.28, according to FactSet.
He noted that the company’s valuation sits near a 20-year high in both absolute and relative terms.
To justify such a premium, Moffett argued, the market would need to assume Apple’s future growth will significantly outpace its historical performance.
“The mere fact that these acute risks have receded doesn’t make Apple especially attractive from a valuation perspective,” he said.
“North of 30x next year’s earnings is still, in our view, too rich for any company with good but not-great earnings growth.”
Price target signals modest downside
Moffett’s updated stance does not suggest bullishness but rather reflects the view that a “sell” thesis is no longer supported solely by valuation concerns.
“As risks to fundamentals resolve, we don’t believe that a sell thesis solely supported by valuation concerns is justified,” he explained.
The analyst set a $225 price target for Apple, implying a potential downside of 5.6% from Wednesday’s close.
While that target reflects caution, it marks a notable retreat from one of the few bearish ratings still attached to the tech giant.
For Apple, the reduction in negative sentiment underscores the resilience of its business model and the power of investor optimism, even as valuation debates continue.
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