Apple Inc. was downgraded to an underperform rating at Jefferies, in the latest example of growing bearishness toward the company.
Analyst Edison Lee is concerned about the outlook for the company's iPhone, especially Apple's ability to drive higher average selling prices (ASPs) over time.
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Supply-chain checks indicate that the company “has cancelled the 20th anniversary all-glass iPhone model due to poor production yield,” he wrote. “This shows that introducing new form factors in the iPhone to drive higher ASP is more difficult than expected.”
A representative for Apple did immediately respond to a Bloomberg News request for comment outside of normal business hours.
A foldable iPhone, which Apple is expected to debut next month, “will now be the only key driver of higher ASP and margin” over the coming years, Lee wrote. However, skyrocketing prices for key components like memory chips will force a high price point for the product, and “we still believe such an expensive phone would be a niche product.”
Jefferies previously had a hold rating on the stock, and further to the downgrade, the price target was lowered to $263.66 from $285.56. Apple shares closed at $313.33 on Friday.
There are now six firms that have the equivalent of a sell rating on Apple, according to data compiled by Bloomberg. That matches the highest number going back to 2012. Last month, KeyBanc Capital Markets cut the stock to underweight, citing concerns over both demand and valuation.
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Overall, the consensus recommendation — a proxy for the ratio of buy, hold, and sell ratings — stands at 3.88 out of five, the lowest since 2019. Fewer than 60% of analysts recommend buying, a percentage that is dramatically below similar megacaps like Microsoft Corp., Amazon.com Inc., and Nvidia Corp., all of which are endorsed by more than 90% of firms.
Shares fell 1.3% in premarket trading on Monday. As of Friday's closing price, the stock is down about 8% off a recent peak,. The latest weakness in the share price followed Apple's quarterly results, where it gave a disappointing sales forecast due to component shortages.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
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