Apple Inc (NASDAQ:AAPL) stock fell 0.058% (As on October 7, 11:34:49 AM UTC-4, Source: Google Finance) after Jefferies downgraded the company to Underperform from Hold with a price target of $205.16, down from $205.82. Better demand for iPhone 17, likely driven by no price hike in the Pro and Pro Max models and “an effective price cut” on the 17 base model, is already in the price, which has led to “excessive expectations” on the replacement cycle and prospects of the 18 Fold. Jefferies argues that enthusiasm has already been baked into the share price and questions whether there would be enough appetite for a $2,000 handset. The new price target of $205 suggests more than 20% downside from the latest close of $257.

Meanwhile, Jefferies analysts argued that stronger-than-expected demand for the iPhone 17, driven largely by a price cut on the base model rather than significant product innovation, has inflated expectations for Apple’s next generation of devices. In particular, the firm flagged investor enthusiasm for the so-called iPhone 18 Fold as excessive. “That has led to excessive expectations on 18 Fold, and the replacement cycle,” analysts wrote. Jefferies analyst Edison Lee advised that the market for foldables is likely to remain limited and cautioned against overestimating their impact on Apple’s earnings trajectory. “Review and reception seems strong, but even so industry expectations for its annual volume is no more than 3m units,” Lee noted, reinforcing Jefferies’ skepticism about bullish foldable assumptions. Jefferies’ annual volume projection for foldable device is far below what some bullish forecasts assume. The analysts also noted that Apple’s latest design introduction—the iPhone Air, marketed as the thinnest iPhone yet—has not resonated strongly with consumers. Without breakthrough features to differentiate new models, Jefferies cautioned that Apple could be leaning too heavily on pricing strategies to drive upgrades.

Additionally, Jefferies emphasized that Apple’s current stock price already reflects an “overly bullish iPhone outlook.” Even after revising forecasts to include a $100 price hike for the forthcoming iPhone 18, the firm said its discounted cash flow model showed little change in Apple’s intrinsic value. The concern, according to Jefferies, is that a price-driven replacement cycle is unlikely to be sustainable and could create margin pressure for the company. “Without innovative features, price-driven replacement cycle may not be sustainable,” the analysts wrote, suggesting that Apple’s reliance on incremental updates and thin form factors may not support long-term earnings growth.