Apple (NASDAQ:AAPL) stock has retreated by over 6% from its highest point this year. It has also formed the risky bearish flag pattern, pointing to more downside, as it plans to hike iPhone prices.
Has Apple Stock Become Overvalued?
Apple, the third-biggest company in the world, may have become highly overvalued, jumping by over 50% in the last 12 months.
Data shows that the company’s forward price-to-earnings ratio has jumped to 34, much higher than the five-year average 28. Its multiple is much higher than the sector median of 24.
The same is happening with the EV-to-EBITDA has jumped to 25.60, higher than the technology sector’s average of 14.
These overvalued metrics are happening as the company’s China revenue jumped. In its recent earnings report, the company said that revenue in the country soared by 38%, its best performance in years. This growth was driven by the iPhone 17 models
The company is also signaling that it will launch a new iPhone Ultra, which will be its first foldable phone. Analysts expect the new phone to be released later this year when it will unveil its iPhone 18 lineup. This phone will likely cost over $2,000 considering that Samsung’s Galaxy Z Fold 7 starts at $1,800.
At the same time, Tim Cook has said that Apple will hike its iPhone prices because of the soaring cost of memory devices. Analysts now expect that the new iPhone 18 Pro will start at $1,399. iPhone 17 Pro starts at $1,099.
Apple also recently announced some new artificial intelligence features as it seeks to bridge the gap with other technology companies like Alphabet (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN).
The most recent numbers showed that its revenue jumped by 17% to $111.2 billion, helped by the success of its iPhone 17 lineup and its services segment. It then announced a new $100 billion share repurchase program.
AAPL Stock Has Formed a Bearish Flag Pattern
Technical analysis points to more AAPL stock retreat. It has formed a bearish flag pattern, which is made up of a vertical line and an ascending channel. This channel also resembles a rising wedge, a common bearish reversal sign in technical analysis.
The two lines of the Percentage Price Oscillator has formed a bearish crossover and are about to cross the zero line. Therefore, there is a risk that the stock will have a bearish breakout, initially to $287, its lowest level this month. A drop below that level will point to more downside towards the 100-day moving average of $280.
Apple stock chart | Source: TradingView
This view, however, is divergent from what some key Wall Street analysts predict. In a recent note, Bank of America maintained its target of $380, while Morgan Stanley and TD Cowen boosted their targets to $360 and $350, respectively.
Image: ShutterStock
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