Apple AAPL is facing a fresh Wall Street warning after Jefferies downgraded the stock to Underperform from Hold and cut its price target to $263.66 from $285.56, implying roughly 18% downside. Analyst Edison Lee’s concern centers on a reportedly canceled premium iPhone design that could weaken Apple’s ability to push prices higher just as component costs are rising.

Jefferies said its supply-chain checks indicate Apple has scrapped a rumored all-glass iPhone planned for 2027 because of manufacturing yield problems. Apple has never confirmed either the device or its cancellation.

Our supply chain checks suggest that the all-glass iPhone (Sep 27) has been canceled due to low yield, Lee said, calling the development a major setback to Apple’s premiumization strategy.

The timing matters because Apple itself has acknowledged higher costs, including memory. In fiscal Q3, product gross margin benefited from tariff refunds but was partly pressured by higher expenses, including memory costs.

Jefferies consequently cut its fiscal 2028 and 2029 earnings-per-share estimates by 2.1% and 3.4%, respectively.

The bearish call arrives despite strong underlying iPhone momentum. Apple’s fiscal Q3 iPhone revenue jumped 22% to $54.25 billion, driven primarily by higher sales of Pro models. Total company revenue climbed 16% to $109.4 billion, while EPS surged 29% to $2.02.

That performance demonstrates why premium devices matter: higher-priced Pro models are already playing a meaningful role in Apple’s growth.

Investors Takeaway

The key issue is whether Apple can keep increasing iPhone average selling prices without the rumored all-glass model.

Jefferies also flagged Apple’s higher trade-in values, which increased roughly 5% in the U.S. and 2% in Europe. Those incentives could strengthen the current upgrade cycle but potentially pull customers forward, leaving fewer buyers for the subsequent generation.

Investors should therefore watch Pro-model mix, iPhone gross margins, memory costs and the next premium-device roadmap. Apple’s current fundamentals remain strong, but Jefferies’ downgrade argues that maintaining those economics could become harder if product costs rise faster than Apple’s ability to push consumers toward increasingly expensive devices.