Brokerage firm Jefferies downgraded Apple on Friday with the securities firm's analysts showing concern over unrealistic expectations about future iPhone models including next year's foldable iPhone. Jefferies also is downplaying the upgrade cycle which seemed to get off to a great start with the strong early sales of the iPhone 17 series. Apple now has a rating of Underperform from the securities house, down from its previous Hold rating. Jefferies now has a price target on the stock of $205.16 from $205.82.
Jefferies says an overly optimistic outlook about the iPhone 18 Fold had led to the overvaluation of Apple
Thanks to the ratings drop, Apple opened lower on Friday and declined as much as $3.18 before rebounding to close the day at $258.02 as it moves closer to the 52-week high and all-time high of $260.10. While Apple's shares remain close to hitting a level never reached before, Jefferies says that better demand for the iPhone 17 is already baked into the price of the stock. Apple gave its base model the ProMotion display that only "Pro" models previously had. As a result, the iPhone 17 screen has a variable 120Hz refresh rate for smoother scrolling and animations, and an Always-on display.
Securites house Jefferies cut its rating on Apple to sell. | Image credit-Artems,bn
Jefferies says that the strength of the demand for the iPhone 17 has led Wall Street to raise expectations of the demand expected for next year's iPhone 18 line and the iPhone 18 Fold and overestimate the replacement cycle. The firm says that the current valuation of Apple already prices in an "overly bullish iPhone outlook."
Jefferies says that without new innovations that are cutting-edge, strong replacement-cycle demand based on lower prices is not sustainable and could result in lower margins. Additionally, the securities outfit says that the ultra-thin design of the new iPhone Air has yet to catch on with consumers. This could be a sign that investors shouldn't try to gauge the success of next year's iPhone 18 Fold "making any bullish view on foldable risky," Jefferies argued.
Apple could price the iPhone 18 Fold at $2,000 matching the Galaxy Z Fold 7
Jefferies says that the price of the iPhone 18 Fold could be the factor that limits the demand for the device. The firm's concern is that Apple will sell its first foldable iPhone model at around $2,000 matching the starting price of the Samsung Galaxy Z Fold 7. The securities house seems to believe that a $2,000 price for a foldable model is as high as consumers will go when it comes to the purchase of such a device and could limit demand.
Will you buy an iPhone 18 Fold?
Yes. I've been looking forward to buying one.
31.25%
No. I'm not interested.
34.38%
I don't know. I haven't seen it yet.
34.38%
Earlier in the week, Seaport Research Partners gave Apple a Buy rating with a price target of $310 which is roughly a 20% increase from Friday's price. Analyst Jay Goldberg told the firm's clients that Apple has become better at monetizing the tech giant's user base.
Apple's shares are on the verge of making a new all-time high
Interestingly, a couple of days ago we told you that Apple investors are a mix of those bullish and bearish on the stock. Some data from FactSet revealed that among the 50 securities firms that they track, 31 rate Apple a Buy or the equivalent. 17 have Apple rated "Hold." Two securities houses, including Jefferies, have Apple's stock rated a "Sell."
With Apple on the verge of hitting an all-time high, Jefferies advice is more of a longer-term outlook that takes next year's iPhone 18 series into account, including the iPhone 18 Fold. The securities house appears to believe in that old Wall Streety adage, "Buy the rumor and sell the news." What this means is that as rumors about a new device, like the first foldable iPhone, start making the rounds, investors start buying the stock and that finally when the phone is announced, profit taking takes over and drives the stock down.
"Iconic Phones" is coming this Fall!
Good news everyone! Over the past year we've been working on an exciting passion project of ours and we're thrilled to announce it will be ready to release in just a few short months.
Recommended Stories
"Iconic Phones: Revolution at Your Fingertips" is a must-have coffee table book for every tech-head that will bring you on a journey to relive the greatest technological revolution of the 21st century. For more details, simply follow the link below!
Alan, an ardent smartphone enthusiast and a veteran writer at PhoneArena since 2009, has witnessed and chronicled the transformative years of mobile technology. Owning iconic phones from the original iPhone to the iPhone 15 Pro Max, he has seen smartphones evolve into a global phenomenon. Beyond smartphones, Alan has covered the emergence of tablets, smartwatches, and smart speakers.
A discussion is a place, where people can voice their opinion, no matter if it
is positive, neutral or negative. However, when posting, one must stay true to the topic, and not just share some
random thoughts, which are not directly related to the matter.
Things that are NOT allowed:
Off-topic talk - you must stick to the subject of discussion
Offensive, hate speech - if you want to say something, say it politely
Spam/Advertisements - these posts are deleted
Multiple accounts - one person can have only one account
Impersonations and offensive nicknames - these accounts get banned
To help keep our community safe and free from spam, we apply temporary limits to newly created accounts:
New accounts created within the last 24 hours may experience restrictions on how frequently they can
post or comment.
These limits are in place as a precaution and will automatically lift.
Moderation is done by humans. We try to be as objective as possible and moderate with zero bias. If you think a
post should be moderated - please, report it.
Have a question about the rules or why you have been moderated/limited/banned? Please,
contact us.
FCC OKs Cingular\'s purchase of AT&T Wireless
Things that are NOT allowed:
To help keep our community safe and free from spam, we apply temporary limits to newly created accounts: