47 Analysts Cover Apple. Their Average Price Target Is Now Below the Stock Price, One Week Before Earnings.

Something odd has happened to Apple (NASDAQ: AAPL) on Wall Street. The 47 analysts covering the stock still rate it a buy, on average. But their average 12-month price target is now about $319 -- slightly below the roughly $320 the stock trades for as of this writing. In other words, the analysts who recommend buying Apple are, collectively, forecasting that it goes nowhere for a year.

That's an unusual setup for one of the world's most valuable tech companies, and the timing sharpens it. Apple reports fiscal third-quarter results on July 30, one week from today.

So is Wall Street quietly saying the stock is fully valued? Or have the targets simply not caught up with a stock that has moved faster than the models tracking it? A little of both, I'd argue.

Image source: Apple.

What a below-price average actually says

The average hides a wide spread. Price targets on Apple run from a low of $215 to a high of $400, and the median target of about $329 sits modestly above the current share price.

The ratings lean the same direction as the average rating suggests. Of the 47 analysts, 29 rate the stock a buy or better, 14 call it a hold, and only four recommend selling.

That combination of bullish ratings and flat targets usually shows up after a stock has made a big move in a short time. Apple qualifies. Shares trade about 59% above their 52-week low of $201.50, and they set a record high of $334.99 within the past week.

Price targets tend to trail a run like that, getting revised upward in steps as analysts refresh their models. Indeed, the revisions are still coming. Morgan Stanley just lifted its target to $364.

But it would be too easy to dismiss the flat average as pure lag. The targets also reflect a valuation that has expanded dramatically. Apple trades at about 40 times earnings, a big premium to where it sat for most of the past few years.

The business is backing it up for now. Revenue rose 17% year over year in the fiscal second quarter, and earnings per share climbed 22%. But a year ago, investors could buy the same company for a much smaller premium. The below-price average is Wall Street's way of saying most of that improvement is now in the price.

The setup into July 30

That leaves next week's report carrying more weight than usual. Apple has scheduled its fiscal third-quarter results for Thursday, July 30. A 40-times-earnings multiple on a company sitting 4% from its record high leaves little cushion if growth cools.

There are reasons to expect the growth to hold. The company's recent momentum has been broad. iPhone revenue hit $57 billion in the March quarter, a record for the period and up 22% year over year, and the high-margin services business set an all-time revenue record of its own.

And Apple keeps adding potential catalysts. A reported device-leasing program with Klarna is reportedly set to launch on July 28 -- a move that could nudge iPhone revenue toward steadier, subscription-like behavior.

With that said, investors shouldn't count on the report to deliver another leg higher. When the average analyst target sits below the price, good news mostly confirms what's already priced in, while any wobble invites the stock to close the gap with the models. Apple doesn't need to disappoint for the stock to stall. It just needs to be ordinary for a quarter.

As for what I'd do, I wouldn't treat a below-price average target as a sell signal. Analyst targets chase the stock in both directions, and Apple remains one of the highest-quality businesses in the world, with staying power that's difficult to find anywhere else. It's a stock I'd continue holding for the long haul, and I'd still call it a top stock to buy and hold -- in moderation -- even at today's premium.

But the flat consensus is useful as a temperature check. It says the easy stretch of this run is probably over, and that returns from here likely have to be earned by the business quarter after quarter, because the valuation multiple has already done its expanding. Going into July 30, that's worth keeping in mind before expecting fireworks.

Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Apple and Klarna Group. The Motley Fool has a disclosure policy.