Jefferies' analyst Edison Lee reported that the planned all-glass iPhone has been canceled due to low production yields, which raises concerns about Apple's ability to introduce higher-priced models amidst increasing memory costs. The firm has adjusted its price target for Apple shares down to $263.66 from $285.56, indicating a potential downside of nearly 16% from the last closing price.
This cancellation is seen as a major hurdle in Apple's strategy to enhance its average selling price (ASP) and profit margins, particularly as the company had intended to extend these features to future iPhone Pro models. Additionally, Jefferies has reduced its earnings per share forecast for fiscal year 2028 by 2.1%.
The anticipated launch of a foldable iPhone in 2026 is viewed as the only near-term opportunity for Apple to increase ASP and margins, but rising memory costs could push its price above $2,000, potentially limiting its market appeal. Following this news, Apple shares fell more than 1% in pre-market trading, although they remain up 15% year-to-date.
Jefferies' downgrade contrasts with the broader market sentiment, as 30 out of 47 analysts still maintain a buy or strong buy rating on the stock