Apple Inc. (NASDAQ: AAPL) faced pressure on Thursday after analysts at Jefferies downgraded the stock, warning that investor expectations surrounding upcoming iPhone models—particularly a potential foldable version—are unrealistic.
The firm cut its rating to Underperform from Hold and lowered its price target to $205.16 from $205.82, implying roughly 20% downside from current levels.
Shares of Apple slipped 0.8% on Friday open to $254.88.
Concerns over iPhone 17 and foldable outlook
Jefferies analysts argued that stronger-than-expected demand for the iPhone 17, driven largely by a price cut on the base model rather than significant product innovation, has inflated expectations for Apple’s next generation of devices.
In particular, the firm flagged investor enthusiasm for the so-called iPhone 18 Fold as excessive.
“That has led to excessive expectations on 18 Fold, and the replacement cycle,” analysts wrote.
Jefferies analyst Edison Lee advised that the market for foldables is likely to remain limited and cautioned against overestimating their impact on Apple’s earnings trajectory.
“Review and reception seems strong, but even so industry expectations for its annual volume is no more than 3m units,” Lee noted, reinforcing Jefferies’ skepticism about bullish foldable assumptions.
Jefferies’ annual volume projection for foldable device is far below what some bullish forecasts assume.
The analysts also noted that Apple’s latest design introduction—the iPhone Air, marketed as the thinnest iPhone yet—has not resonated strongly with consumers.
Without breakthrough features to differentiate new models, Jefferies cautioned that Apple could be leaning too heavily on pricing strategies to drive upgrades.
Valuation pressures and margin risks
Jefferies emphasized that Apple’s current stock price already reflects an “overly bullish iPhone outlook.”
Even after revising forecasts to include a $100 price hike for the forthcoming iPhone 18, the firm said its discounted cash flow model showed little change in Apple’s intrinsic value.
The concern, according to Jefferies, is that a price-driven replacement cycle is unlikely to be sustainable and could create margin pressure for the company.
“Without innovative features, price-driven replacement cycle may not be sustainable,” the analysts wrote, suggesting that Apple’s reliance on incremental updates and thin form factors may not support long-term earnings growth.
Divergent views on Wall Street
Jefferies’ cautious stance stands in contrast to the broader sentiment on Wall Street.
Of the 51 analysts covering Apple, 33 rate the stock a Strong Buy or Buy, while only two, including Jefferies, recommend a sell-equivalent rating, according to LSEG data.
Apple shares have gained 14% over the past year.
Investors remain optimistic about the company’s brand strength, ecosystem, and potential to capture new demand with innovations such as foldable devices.
While Jefferies’ downgrade adds a note of caution, the debate underscores the challenges Apple faces in maintaining momentum for its flagship product line as consumer preferences evolve and competition intensifies in the global smartphone market.
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