Jefferies cuts Apple rating as higher-priced iPhone roadmap looks difficult

Investing.com -- Jefferies on Monday downgraded Apple to Underperform from Hold and lowered its price target to $263.66 from $285.56, which implies roughly 16% downside from the stock’s Friday close. The move follows supply-chain checks suggesting Apple has canceled its planned all-glass iPhone, a setback the broker said undermines the company’s path to higher-priced devices.

According to Jefferies analysts led by Edison Lee, the 20th-anniversary all-glass iPhone, which had been expected to launch in September 2027, was scrapped due to poor production yield. The firm estimated the device would have carried a blended retail average selling price (ASP) of $2,060 and said Apple’s broader plan had been "to extend the all-glass features to future iPhone Pro and Pro Max models, further raising their ASP and margin."

As a result, Jefferies lowered its estimated compound annual growth rate for iPhone ASP between fiscal 2026 and 2031 to 6.8% from 9.0%, while cutting fiscal 2028 and 2029 EPS estimates by 2.1% and 3.4%, respectively.

Apple shares fell 1.2% in premarket trading by 07:00 ET (11:00 GMT).

With the all-glass model shelved, analysts said the foldable iPhone remains "the only key driver of higher ASP and margin" going forward. However, rising memory costs are expected to push the starting price of the iPhone 18 Fold to $2,199 for the 256GB version, climbing to $3,099 for the 2TB model.

"We still believe such an expensive phone would be a niche product," the analysts wrote, forecasting 14 million unit sales in fiscal 2028.

Jefferies’ supply-chain checks also indicate Apple plans to raise memory in the iPhone 19 Pro Max to 16GB of DRAM from 12GB, but only for that model. Analysts said this points to "still-limited breakthrough in Apple Intelligence," noting that if memory prices rise more than expected in fiscal 2027, Apple could abandon the upgrade altogether. At the broker’s estimated contract pricing, an additional 4GB of DRAM would add $60-70 to the iPhone’s bill of materials cost.

The analysts also addressed recent trade-in value changes that fueled market speculation about imminent iPhone 17 price hikes. While Apple raised trade-in values for iPhone 15 and 16 in several markets, they noted Apple actually cut trade-in prices for iPhone 16 Pro and Pro Max in China by 5% and 2%, respectively.

Because trade-in prices are negotiated monthly with regional dealers, the changes "may not have any implication for new iPhone selling prices," the analysts said, though higher U.S. trade-in values could pull forward demand for iPhone 17 while adding pressure to iPhone 18 sales.

You May Also Be Interested In

• Apple Trains Its Own AI Model For China Market With Alibaba's Support- Reuters
• Avalonbay Communities (AVB) dropped from S&P 500
• Jefferies upgrades Five Below to Buy, sees path to TJX-like re-rating