Jefferies Downgrades Apple Amid Fears Over iPhone Price Ceiling
Apple's stock has been struggling, and a recent downgrade from Jefferies highlights concerns about iPhone prices. Analyst Edison Lee believes Apple has run out of ways to increase prices without losing customers.
The problem is not just the phone itself but its price. Lee points out that Apple cancelled its planned 20th anniversary all-glass iPhone model, which was meant to justify a higher price tag. This decision shows that introducing new features or designs to drive up average selling prices (ASPs) is more difficult than expected.
Lee's supply chain checks revealed that the cancellation of the all-glass model has left Apple with only one option for driving higher ASPs and margins: the foldable iPhone. However, this phone will likely be expensive due to rising component costs, which could make it a niche product.
The market is losing patience with Apple's stock performance, which has declined 8% since its recent peak. Jefferies' downgrade brings the total number of sell-equivalent ratings on Apple to six, the most since 2012. KeyBanc cut Apple to underweight last month due to demand and valuation concerns.
The market is waiting for actual proof that the foldable phone can sell at a price that makes sense for Apple's profits.