Key Takeaways
- Jefferies downgraded Apple to Underperform (Sell) and slashed price target to $263.66 from $285.56
- Sources indicate Apple terminated development of all-glass iPhone model due to production yield challenges
- The cancelled premium device was slated for September 2027 release with projected $2,060 retail pricing
- Firm reduced iPhone average selling price growth projection from 9.0% to 6.8% through fiscal 2031
- Shares declined approximately 1.9% Monday in response to the analyst action
Shares of Apple (AAPL) retreated approximately 1.9% Monday following a downgrade from Jefferies, which moved the tech giant to Underperform from Hold while reducing its price objective to $263.66 from the prior $285.56. The revised target suggests potential downside of roughly 16% from Friday’s closing price and ranks among the Street’s most bearish calls.
At the heart of the downgrade lies a singular issue: Jefferies analyst Edison Lee contends that Apple has silently terminated development of its ambitious all-glass iPhone.
Development of this device reportedly began as early as 2025, with an anticipated launch window of September 2027 coinciding with the iPhone’s two-decade milestone. The firm had projected a blended retail price point near $2,060 for the premium handset.
While Apple never formally announced the initiative, the company did secure intellectual property protection for a “six-sided glass enclosure” in a 2019 patent filing.
Based on Lee’s supply chain intelligence, the program was terminated due to inadequate production yield rates. Low yield indicates an unacceptable percentage of defective units during manufacturing, rendering large-scale production economically unfeasible.
Lee characterized the cancellation as “a major setback to efforts to bring in higher-priced iPhones” amid rising memory component expenses. The strategy, according to Lee, involved extending the all-glass construction to subsequent iPhone Pro and Pro Max variants to elevate both average selling prices and profit margins.
Average Selling Price Projections Reduced
Following the elimination of the all-glass variant, Jefferies lowered its compound annual growth rate forecast for iPhone average selling price to 6.8% from 9.0% spanning fiscal years 2026 through 2031. The firm additionally reduced earnings per share projections, decreasing fiscal 2028 estimates by 2.1% and fiscal 2029 by 3.4%.
Lee now identifies the foldable iPhone as “the only key driver of higher ASP and margin” moving ahead. The iPhone 18 Fold is anticipated to debut at $2,199 for the entry-level 256GB configuration, climbing to $3,099 for the top-tier 2TB variant. Jefferies projects 14 million units in sales for this device during fiscal 2028.
AI Strategy Under Scrutiny
The research note additionally expressed reservations regarding Apple’s artificial intelligence initiatives. Lee suggested the gradual deployment of Apple Intelligence complicates the company’s rationale for incorporating additional memory into devices.
Supply chain intelligence gathered by Jefferies indicates Apple intends to increase DRAM in the iPhone 19 Pro Max to 16GB from the current 12GB, though exclusively for that particular model. Should memory pricing escalate beyond expectations in fiscal 2027, Lee cautioned, Apple may abandon the upgrade altogether. Each incremental 4GB of DRAM contributes approximately $60-70 to manufacturing costs.
The analyst further addressed recent adjustments to trade-in valuations that fueled conjecture regarding iPhone 17 pricing strategy. Although Apple elevated trade-in offers for iPhone 15 and 16 models in certain regions, the company simultaneously reduced trade-in pricing for iPhone 16 Pro and Pro Max in China by 5% and 2% respectively.
Prior to Monday’s session, Apple stock had appreciated over 15% year-to-date in 2026. That momentum had previously suffered last month when fiscal third-quarter financial results prompted a market reaction that erased $359 billion in market capitalization.
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