Investing.com -- Analysts at KeyBanc have downgraded their rating of Apple (NASDAQ:AAPL) to "Underweight" from "Sector Weight," citing worries over sales of the tech giant's flagship iPhone device.

In a note to clients, KeyBanc analysts Brandon Nispel noted that a survey conducted by the investment bank showed demand for the lower-cost iPhone SE is "not purely additive" to overall sales of the smartphone.

Meanwhile, other data points suggest the rate of phone upgrades in the US is "unlikely to move higher" in the near term, Nispel said. Some strategists have predicted Apple could see an influx of customers upgrading their older devices to take advantage of recently-announced artificial intelligence-fueled capabilities in the new iPhone 16 model.

"Our survey shows that 59% of respondents are interested in upgrading to iPhone 16, which appears strong," Nispel wrote. "However, our survey also shows that of those respondents who are likely or extremely likely to upgrade to the iPhone 16, 61% are interested in the iPhone SE. We think this shows the iPhone SE is not incremental, and could possibly be cannibalistic to iPhone 16 sales."

Nispel argued that expectations calling for "Apple's highest growth in 3 [plus] years and a major inflection in all geographies and products" are unlikely to come to pass, adding such an increase has "rarely [...] occurred throughout history."

Finally, with Apple's shares trading at roughly 23 times 12-month forward earnings and a five-times premium over the tech-heavy Nasdaq Composite index, the stock "appears expensive relative to its history and peers," Nispel said. Apple's three-year average valuation is about 20 times forward earnings, while the Nasdaq's historical premium is 3 times, according to Nispel.

Apple shares were lower in premarket US trading.

Elsewhere on Friday, figures from researcher IDC showed iPhone sales in China dipped by 0.3% in the third quarter, while rival Huawei's devices spiked by 42%, underlining the intensifying competition in the world's biggest smartphone market.

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