By Mackenzie Tatananni
While Apple stock could eke out some gains in the new year, don't expect it to generate eye-watering returns.
That's according to Raymond James, which resumed coverage of the stock in a note Friday, rating it at Market Perform. Before suspending coverage, the analysts rated Apple at Outperform, meaning the latest recommendation technically is a step down.
Some tech stocks had a blowout year in 2025, none more impressive than the makers of data-storage devices and memory chips like Western Digital and Micron Technology.
While Apple ended the year in the green, it wasn't a notably strong performer. Shares gained nearly 12% in 2025, lagging slightly behind the benchmark S&P 500 index, which ended the year up 16%.
Analyst Melissa Fairbanks acknowledged the iPhone maker's "strong fundamentals and improving product cycles" in the research note Friday. However, "we believe Apple's current valuation appropriately reflects these strengths, limiting near-term upside," Fairbanks wrote.
She noted that Apple was trading at 31 times the firm's 2027 non-adjusted earnings estimate, or "several turns" above the five-year average price-to-earnings ratio. On an enterprise value-to-free cash flow basis, this also implies a roughly 31 times multiple, Fairbanks added.
She believes additional gains will be hard to come by in 2026. Considering Apple's sweeping base of roughly 2.4 billion users, "we believe incremental gains from technology upgrade cycles will become more difficult to attain, much less move the needle," Fairbanks continued.
The analyst believes the success of the iPhone 17 refresh cycle has driven most of Apple's recent share gains. While she doesn't want to discount the value generated by this growth, which she projects to have come in at above $217 billion in 2025, Apple's valuation tempers her optimism for now.
Eighteen firms tracked by FactSet, Raymond James included, expect the stock to perform in line with the market. The majority, 30 firms, rate Apple a Buy, while four others rate it at Sell or the equivalent.
Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
January 02, 2026 08:29 ET (13:29 GMT)
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