Jefferies downgrades Apple, citing canceled all-glass iPhone

Apple ↘ 1.62% shares fell on Monday after Jefferies ↘ 2.31% downgraded the stock to Underperform from Hold, citing supply-chain checks that suggest the company has canceled a planned all-glass iPhone expected to mark the device's 20th anniversary in September 2027. Analyst Edison Lee cut his price target to $263.66 from $285.56, implying roughly 14% downside from recent levels.stocktwits+1

The downgrade comes as Apple now holds the most sell-equivalent ratings from Wall Street firms since 2012, shortly after the death of co-founder Steve Jobs, according to Bloomberg data cited by Fortune.fortune

A 'Major Setback' for Premium Pricing

Jefferies described the cancellation as a "major setback to efforts to bring in higher-priced iPhones amid soaring memory costs." The firm estimated the all-glass model could have carried a blended average selling price of roughly $2,060 and that its design was expected to trickle down to future Pro and Pro Max models, providing Apple with a broader avenue to lift pricing and margins.tradingview+1

With that device reportedly scrapped due to poor production yields, Jefferies said Apple will now lean more heavily on its expected foldable iPhone to drive premium-device growth. The firm expects the iPhone 18 Fold to start at $2,199 for 256 GB and reach $3,099 for 2 TB, pricing that could limit it to a narrow customer base. Jefferies also cut its fiscal 2028 and 2029 EPS estimates by approximately 2% and 3%, respectively.stocktwits+1

Rising memory costs compound the challenge. Jefferies noted that an additional 4 GB of DRAM could add $60 to $70 to an iPhone's bill of materials, squeezing margins at a time when DRAM supply is strained by AI-driven data center demand.finance.yahoo+1

Munster Pushes Back

Deepwater Asset Management's Gene Munster offered a contrarian view during a CNBC interview, calling Apple shares "undervalued" and pointing to the company's September-quarter revenue growth guidance of 9% to 11%, which he said was "much better" than initially perceived after accounting for a roughly 2.5% foreign exchange headwind.stocktwits

Munster expects a major consumer hardware upgrade cycle to begin around mid-to-late 2027, driven by personalized AI running inference on devices. "When you put this together, I think the shares are undervalued, and you're going to see a strong next 12 months," he said.stocktwits

Leadership Transition Looms

The turbulence arrives as Apple prepares for a leadership change. John Ternus is set to succeed Tim Cook as chief executive next month, coinciding with Apple's annual September launch event where the company is expected to unveil its first foldable phone. Apple reported fiscal third-quarter revenue of $109.4 billion, up 16% year over year, though its forward guidance disappointed investors and shares have trended lower since late July.tradingview+1