Jefferies Sees Pressure on Apple's Margins as iPhone 18 Pricing Strategy Raises Concerns
Apple stock is facing a new warning from Jefferies after the launch of the iPhone 18. Analyst Edison Lee reaffirmed his Underperform rating and $263.66 price target, which implies about 17.6% downside from the current price.
Lee's concern is that Apple's pricing strategy will negatively impact its margins. He believes the company is keeping some iPhone prices lower than expected to support demand, rather than passing on higher costs to customers.
The 256GB and 512GB versions of the iPhone 18 Pro and Pro Max are priced about 6% to 8% below Jefferies' estimates, while prices for the 1TB and 2TB versions are closer to the firm's expectations. This could leave Apple absorbing more of its rising component costs.
Lee said that Apple is prioritizing iPhone volumes over profitability, which could put further pressure on its margins. He noted that the company could have raised prices further to protect profitability, but instead appears willing to accept lower margins.