Analyst firm Jefferies has downgraded Apple stock to underperform alongside a price cut, because the firm believes Apple has cancelled its all-glass design for the still-unannounced iPhone 20.
Apple has a lot going on to be concerned about. RAM pricing will just get worse, SSD flash cells are a year away from relief, and so forth. One firm thinks that they have a bigger problem than all that.
Analyst Edison Lee of Jefferies is concerned that the iPhone 20 will not be an all-glass device.
"The all-glass iPhone has been cancelled due to low yield," Lee said. "We view this as a major setback to efforts to bring in higher-priced iPhones amid soaring memory costs."
Lee believed that this all-glass body would be migrated to the iPhone Pro and iPhone Pro Max models eventually. This would, in turn, raise their selling price and margin.
So now, the analyst is troubled that the folding iPhone will be niche at over $2000. Furthermore, he says that it is the "only key driver of higher ASP and margin."
The firm is relying on "supply chain checks." Glass supply chain checks have never been a reliable indicator of Apple's future plans for product releases. Apple's glass production is easier to secure and hide, given that most of it is inside the US.
Also, finalization of the glass does not have to happen this early. Even with a radical new all-glass enclosure, which was always only rumored for the iPhone 20 with low certainty, Apple can take until February of release year to lock down the design.
Most of the rumors for the iPhone 20 have said that the device will be more like the iPhone Air, than the all-glass enclosure that's been rumored and patented for over a decade.
Wall Street mostly disagrees with bearish Jefferies
Jefferies is bucking the trend of the rest of Wall Street. The firm is one of three that have Apple at an Underperform rating. The firm remains notably underwater on Apple stock, and has not had a price target above what Apple's actual stock price has been for years.
As CNBC notes on Monday, of the 47 firms that cover Apple, 10 have a strong buy rating, 20 have a buy, 14 have a hold and now three have that underperform. Zero have a sell rating.
The current price of the stock is $310.00 before trading opens on August 10, and was $313.33 at close on Friday. The after-hours drop was gradual over the weekend, and the last few times Jefferies had a note like this, it didn't impact the market at all.
The highest price target is $400, and the consensus average is $319.48, including Jefferies. We've asked for the note in full.
