Atlantic Downgrades Apple To Underweight, Says iPhone 11 Could Still Disappoint

Atlantic Equities analyst James Cordwell downgraded Apple to Underweight from Neutral with a price target of $275, up from $235, telling investors that the stock's 50% relative outperformance over the last 12 months has been driven "entirely" by multiple expansion.

While this is not without precedent, as similar re-ratings occurred ahead of both the iPhone 6 and iPhone X cycles, Cordwell said that multiple expansion this time has been greater than at a similar point in prior cycles and he believes upside potential from the 5G cycle is "now more than fully priced in."

Additionally, he thinks Services and Wearables are unlikely to be a source of material upside and he thinks iPhone 11 average selling price pressure could result in revenue disappointing, Cordwell tells investors.