Apple Stock Downgraded by Jefferies: iPhone Strategy Shift
By ThePip Desk
Jefferies downgrades Apple (AAPL) stock to ‘Underperform’ due to the cancellation of a high-priced all-glass iPhone, impacting future ASPs and margins.
Jefferies has downgraded Apple (AAPL) stock to ‘Underperform (hold)’, citing the reported cancellation of a significant 20th-anniversary all-glass iPhone model. This move follows supply chain assessments by Jefferies, which indicated that low production yield led to the device’s shelving.
The cancellation significantly impacts Apple’s strategy to introduce higher-priced models, especially as memory costs rise. Jefferies anticipates a reduction in the iPhone’s average selling price (ASP) compound annual growth rate.
- iPhone ASP CAGR revised from 9.0% to 6.8% (FY26-FY31).
- Canceled all-glass iPhone projected price: approximately $2,060.
- Future iPhone Pro and Pro Max models were intended to incorporate these features.
The brokerage firm notes that introducing new iPhone form factors to boost ASP is proving more challenging than initially expected. Rising DRAM chip costs are also compressing Apple’s profit margins across its entire product line.
Foldable iPhone: A Niche Future?
While the foldable iPhone is now seen as the primary driver for higher ASP and margins, its market penetration is projected to be limited. Jefferies forecasts modest sales for this anticipated high-end device.
- Estimated retail price for 256GB iPhone 18 Fold: $2,199.
- Estimated retail price for 2TB iPhone 18 Fold: $3,099.
- Projected sales for FY28: only 14 million units.
Price Adjustments and Market Performance
Apple recently implemented a substantial price increase for its Mac and iPad products. However, the company has not yet applied similar adjustments to its iPhone lineup.
- Mac and iPad prices increased nearly 20% on June 25.
- New price target for AAPL: $263.66 (a 16% decrease from previous $285.56).
- AAPL currently trading around $306.
- Stock performance over last 12 months: 32% increase.
- Performance in 2026: 12% increase.
- Performance in past month: 6% decline.
Jefferies believes Apple will likely encounter difficulties balancing volume and margin over the next 18 months. The firm’s overall bearish stance stems from the canceled product, escalating costs, and a perceived lack of compelling AI-driven upgrade reasons for consumers.