Apple (AAPL -0.60%) stock dropped 2.5% on Tuesday, following a series of reports on tepid demand for the iPhone X in the first calendar quarter of 2018, or Apple's second quarter of fiscal 2018. The lowered stock price shaved more than $20 billion from the tech giant's market capitalization.

The stock's pullback comes as several analysts lowered their shipment estimates for Apple's new, flagship iPhone X. Are these analysts' lowered outlook for the iPhone X a reason to be concerned? Or are concerns about potentially worse-than-expected iPhone X demand overblown?

Apple customers holding the iPhone X on launch day

iPhone X. Image source: Apple.

A lowered outlook

Three bearish reports on iPhone X demand surfaced just on time for the stock to take a hit on Tuesday.

One report from Taiwanese newspaper Economic Daily (via Bloomberg) asserted Apple trimmed its iPhone sales forecast from 30 million to 50 million units for the first calendar quarter of 2018. Though it isn't clear if the newspaper is referring specifically to iPhone X or overall iPhone sales, it seems to be referring to sales of the new iPhone X.

Meanwhile, an analyst from JL Warren Capital predicted that iPhone X unit shipments in the first calendar quarter will be 25 million units, down from 30 million units in the fourth calendar quarter.

Similarly, Sinolink Securities analyst Zhang Bin said iPhone X shipments during the first calendar quarter could be "as low as 35 million, or 10 million less than he previously estimated," reported Bloomberg.

In the first calendar quarter of 2017, or Apple's second quarter of fiscal 2017, it sold 50.8 million iPhone units.

Reason to worry?

While investors are obviously giving weight to these concerns as Apple stock pulled back meaningfully on Tuesday, there's good reason to question these worries.

Sure, Apple stock is up 46% in the past 12 months, making it ripe for a pullback. But the stock still trades at a conservative valuation compared to peers in the S&P 500 and compared to other tech giants. Apple's price-to-earnings (P/E) ratio of 18.5, for instance, is much lower than the average P/E ratio of stocks in the S&P 500 of just over 25. Further, tech giants Microsoft (MSFT 0.45%) and Alphabet (GOOGL -0.95%) (GOOGL -0.95%) both have P/E ratios of about 30.

And Apple's valuation is conservative relative to the overall outlook for the company's earnings growth over the next five years. Currently, the average consensus estimate for Apple's annualized earnings-per-share (EPS) growth over the next five years is a notable 10.7%, according to Yahoo! Finance. This compares to an estimate for 10.6% and 20.1% for Microsoft and Alphabet, respectively.

Apple's recent earnings-per-share growth is also impressive. In Apple's most recently reported quarter, EPS climbed 24% year over year. This compares to year-over-year earnings-per-share growth of 32% and 17% at Microsoft and Alphabet, respectively, in the two companies' most recently reported quarters.

iPhone 8 and 8 Plus being splashed by water

iPhone 8 (right) and 8 Plus (left). Image source: Apple.

Investors should keep in mind that since Apple released both the iPhone 8 and iPhone X within less than two months of each other, it's nearly impossible for investors to know what the product mix will look like in Apple's second fiscal quarter of 2018 for the just-launched iPhones. Lower-than-expected demand for iPhone X could simply mean more consumers are opting to buy the iPhone 8 and 8 Plus instead of the iPhone X.

Even with these reports in mind, investors shouldn't fret. Apple's recent momentum across its business and its guidance for a huge holiday quarter are the most reliable indicators investors have right now of how the company is doing -- and it's easily living up to its conservative valuation.