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Jefferies analyst Edison Lee downgraded Apple to "Underperform," cutting its price target to $263.66 from $285.56. The downgrade stems from the cancellation of a high-margin all-glass iPhone model, initially set for a September 27 launch, due to low manufacturing yields. Rising memory costs are another factor, prompting Lee to lower Apple's earnings per share estimates for fiscal 2028 and 2029 by 2.1% and 3.4%, respectively. Following the announcement, Apple's stock dropped 2.24% to $306.30.
The cancellation disrupts Apple's strategy to boost average selling prices, a cornerstone of its profitability. Jefferies also highlighted weakening trade-in incentives as a potential drag on future demand. Despite these setbacks, some analysts, including Gene Munster, remain optimistic about Apple's long-term growth, particularly in AI-driven initiatives.
Investment implication: The loss of a high-margin product and rising component costs put immediate pressure on Apple's profitability and pricing power. For you, this highlights the need to track Apple's ability to stabilize its supply chain and adapt its product lineup, as these factors could influence its market valuation and competitive positioning.