Next 6-12 months crucial for prediction platforms like Kalshi and Polymarkets
Investing.com - Apple (NASDAQ:AAPL) stock, currently trading at $257.13 with a market capitalization of $3.82 trillion, received a downgrade from Jefferies on Friday, with analyst Edison Lee cutting the rating from Hold to Underperform and slightly reducing the price target to $205.16 from $205.82. According to InvestingPro analysis, the stock appears overvalued at current levels, trading near its 52-week high of $260.10.
The downgrade comes despite Jefferies raising its iPhone unit growth forecasts to 7%, 1%, and -1% for fiscal years 2025, 2026, and 2027, respectively, compared to previous estimates of 5%, -3%, and 0%. The company’s revenue growth forecast for FY2025 stands at 6%, while maintaining a strong financial health score of 2.88 out of 5 on InvestingPro.
Jefferies believes the improved demand for iPhone 17, partly attributed to a price cut on the base model, is already reflected in Apple’s current stock price, leading to what the firm describes as "excessive expectations" for the iPhone 18 Fold and replacement cycle.
The firm’s cautious outlook for fiscal years 2026 and 2027 stems from two key factors: an anticipated $100 price increase for iPhone 18 Pro and Pro Max models, and conservative projections for the iPhone 18 Fold, which Jefferies estimates will reach 12.5 million units.
According to Jefferies, Apple’s current stock price implies more than twice the iPhone 18 Fold sales volume that the firm is forecasting for each year of production.
In other recent news, Apple has seen a notable shift in its App Store revenue growth. Evercore ISI reported a deceleration, with App Store revenues growing 7% year-over-year in September, compared to 14% in August. Despite this slowdown, Evercore ISI reiterated its Outperform rating and maintained a price target of $290 on Apple. CLSA also kept its Outperform rating with a price target of $265, citing a potential upgrade cycle that could drive future product revenue growth. Meanwhile, UBS maintained a Neutral rating and a $220 price target, observing that demand for the iPhone 17 has passed its peak. In legal developments, Apple and OpenAI have filed motions to dismiss a lawsuit from Elon Musk’s xAI, which accused them of anti-competitive practices in the AI market. The lawsuit claimed that Apple and OpenAI had an "exclusive" arrangement affecting the prominence of certain apps in the App Store, with xAI seeking significant damages. These developments highlight the diverse challenges and opportunities Apple is navigating in its business landscape.
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