Jefferies Downgrades Apple to Underperform Over iPhone Pricing Concerns
Apple's stock price took a hit on Monday after Jefferies downgraded its rating to Underperform due to concerns over iPhone pricing. The firm cited challenges in Apple's efforts to develop higher-priced models and increase average selling prices.
Jefferies' supply-chain checks indicate that Apple has canceled plans for an all-glass iPhone set to launch in September 2027, which would have had a blended retail average selling price of around $2,060. This cancellation is seen as a setback for Apple's efforts to introduce higher-priced iPhones and expand margins.
Jefferies lowered its estimate for iPhone average selling price growth between fiscal 2026 and fiscal 2031 to 6.8% from 9%, assuming no change in unit sales forecasts. The firm now views the foldable iPhone as the main potential driver of higher iPhone prices, but notes that it may be limited by a niche market.
Jefferies also highlighted rising memory costs as a pressure on Apple's product economics. The firm estimates an additional 4GB of DRAM could add $60 to $70 to the iPhone's bill of materials at its estimated contract price.