Apple Inc (NASDAQ:AAPL, XETRA:APC) shares fell about 2% on Monday after Jefferies downgraded the stock to Underperform, citing challenges in Apple’s efforts to develop higher-priced iPhone models and lift average selling prices.
Along with the rating downgrade, Jefferies lowered its price target to $263.66 from $285.56, implying downside from current levels of about $306.
Jefferies wrote that its supply-chain checks indicate Apple has canceled a planned all-glass iPhone that was expected to launch in September 2027, citing poor production yields. The firm highlighted the cancellation as a setback to Apple’s efforts to introduce higher-priced iPhones and expand margins.
Jefferies estimated the canceled model would have carried a blended retail average selling price of about $2,060 and noted that Apple had planned to extend its all-glass design to future Pro and Pro Max models.
The firm lowered its estimate for iPhone average selling price growth between fiscal 2026 and fiscal 2031 to 6.8% from 9%, assuming no change to its unit sales forecasts.
The firm wrote that the cancellation leaves the foldable iPhone as the main potential driver of higher iPhone average selling prices and margins. Jefferies expects Apple’s iPhone 18 Fold to start at about $2,199 for 256GB of storage and reach $3,099 for a 2TB version, which it views as limiting the product to a niche market. It forecasts 14 million units of iPhone 18 Fold sales in fiscal 2028.
Jefferies also highlighted rising memory costs as a potential pressure on Apple’s product economics. Its supply-chain checks indicate Apple may increase DRAM in the iPhone 19 Pro Max to 16GB from 12GB, although the firm expects the upgrade only for the Pro Max model. Jefferies estimated an additional 4GB of DRAM could add $60 to $70 to the iPhone’s bill of materials at its estimated contract price.
The firm also noted Apple’s recent changes to iPhone trade-in values. Apple raised trade-in values for some iPhone models in the US and Europe, which Jefferies wrote could support demand for the iPhone 17 but potentially put additional pressure on iPhone 18 sales if the latter comes with limited feature upgrades alongside assumed mid-teens percentage price increases.