A fresh dent appeared in Apple’s (NASDAQ: AAPL) armor as Jefferies moved the stock down to Underperform from Hold. The move stands out not only for the rating itself (bearish calls on Apple are scarce) but for the reasoning: Wall Street may be pricing in an iPhone future that looks better on financial models than in stores.

In a note led by analyst Edison Lee, Jefferies cut its price target to $205.16, more than 20% below Apple’s current $257.13 close. The downgrade comes after stronger-than-expected sales of the iPhone 17, helped by base-model price cuts and high trade-in values, fueled optimism that Apple’s upcoming foldable “iPhone 18 Fold” could spark a blockbuster upgrade cycle.

But Lee isn’t buying it. “Better demand for iPhone 17, partly due to a price cut on the base model, is already in the price,” he wrote. “That has led to excessive expectations on the 18 Fold, and the replacement cycle.”

Foldables, however, remain a niche. The device is expected to launch near $2,000, but industry forecasts cap demand at roughly three million units a year. For comparison, Apple sold more than 200 million iPhones last fiscal year. That mismatch, Lee warns, could leave Apple chasing margins on price cuts rather than innovation… an uncomfortable strategy for a company built on design and desirability.

The timing of the downgrade adds even more weight. Apple’s stock has risen more than 20% off its August lows, bringing it back near record highs, but remains only slightly positive year-to-date. The Nasdaq 100, by contrast, has advanced over 15%. Among the “Magnificent Seven” stocks, Apple is now one of the least-favored by analysts (ahead of only Tesla Inc.) with fewer than 7% rating it a sell.

Apple’s shares bounced 0.5% Friday following the downgrade.

About Jefferies

Jefferies is a global investment banking firm headquartered in New York, known for its focus on equity research, capital markets, trading, and asset management. With roots dating back to 1962, the firm has built a reputation as one of Wall Street’s more independent voices, often issuing bold calls that stand apart from larger rivals. Jefferies serves clients worldwide, including corporations, governments, and institutional investors, and is a member of the Fortune 500.

At the time of publishing this article, Stocks.News holds positions in Apple as mentioned in the article.