Jefferies downgrades Apple to Underperform, sets price target well below current trading price

Apple has a $3.82 trillion market cap and a stock price hovering around $257. Jefferies thinks fair value is closer to $205. That gap tells you everything about why this downgrade landed with a thud on October 3, 2025.

Jefferies analyst Edison Lee moved Apple from Hold to Underperform, one of the more pointed calls you can make on the world’s most valuable company. The new price target of $205.16, nudged down from a prior $205.82, implies roughly 20% downside from where shares were trading at the time of the call.

The foldable problem

The core of Lee’s argument is not that Apple is a bad company. It’s that the stock is pricing in a version of Apple’s future that may not exist.

Jefferies estimates the iPhone 18 Fold will sell approximately 12.5 million units annually. The current stock price, by the firm’s math, implies more than double that volume. When a stock price requires something to sell twice as well as your best estimate, that’s a problem worth flagging.

Lee also flagged a planned price increase of roughly $100 on higher-end iPhone 18 models.

iPhone growth projections: modest, then negative

Jefferies updated its iPhone unit sales forecasts alongside the rating change. The firm projects 7% unit growth for FY2025, followed by 1% growth for FY2026, and a -1% contraction in FY2027.

Apple shares dropped about 0.9% on the day of the downgrade.

The gap between Lee’s $205.16 target and the $257 trading price reflects a market that has been willing to pay a significant premium for Apple’s optionality. Jefferies is essentially arguing that the premium has overshot the underlying reality.

What this means for investors watching Apple

Lee’s growth trajectory — 7% down to 1% down to -1% — suggests Jefferies believes the iPhone 18 cycle will provide a temporary lift before the unit growth story runs out of road. If that forecast proves accurate, the services-revenue narrative becomes the only engine left, and the market will need to decide how much it’s willing to pay for a services business attached to a hardware platform with flat-to-declining unit sales.

The price target of $205.16 sits roughly where Apple traded in early 2024, meaning Jefferies is effectively arguing the stock’s gains over the past year-plus have run ahead of fundamentals.