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Nomura Instinet downgraded its rating for Apple shares to neutral from buy, citing the iPhone maker's presently high valuation against the prior iPhone cycles.
In a note to clients, analyst Jeffrey Kvaal argued that the stock's increase for the iPhone X supercycle is nearing its end. The note added that unit growth is well projected by consensus and a historically full multiple.
Apple shares declined in early trading on Tuesday following the report, sliding by 1.1 percent.
Kvaal underlined that Apple is trading at a valuation of 15 times estimated 2018 earnings. He stated that during the iPhone 6 cycle, the firm's earnings multiple peaked at 14 times earnings and then retreated to 9 times earnings. The analyst also pointed out that the smartphone maker's stock fell from 13 times earnings to 8 times earnings during the iPhone 5 cycle.
The analyst also reduced his price target for the tech giant's shares to $175 from $185, one percent lower compared to Monday's closing price.
Out of the 38 analysts who cover the company, 31 issued a buy rating. The remaining have a hold rating, according to FactSet. There is no analyst that has a sell rating.
