Retail investors should ignore the Jefferies downgrade
Retail investors should stay the course on Apple stock despite a new Wall Street downgrade , according to Jim Cramer. “People at home, I urge you not to listen,” Jim said Friday, in response to Jefferies analyst Edison Lee cutting the iPhone maker’s shares to underperform, a sell equivalent rating, from hold. “I think owning is much better,” Jim concluded, reaffirming his long-time Apple mantra, “own it, don’t trade it. That’s, in part, because Jefferies has changed its rating on the stock five times since the start of the year. Everyday investors should avoid trading Apple stock like that, Jim said, given the expertise required to time the market correctly on the way out and on the way back in — not to mention any capital gains taxes. “When you see this kind of trading, it is exactly antithetical of everything I’ve stated,” Jim said during “Squawk on the Street” on Friday morning. “This is what kills you [performance-wise]. You cannot sell, hold, sell, hold, sell hold [as an] individual.” At the same time, Jim acknowledged that Lee has had a good track record this year of downgrading and upgrading Apple at opportune times. “If I’m a hedge fund manager, I’m saying [he’s] in the hall of fame of trading.'” During Friday’s Morning Meeting , Jim added, “What’s good for … hedge funds might not be good for holders who are retail.” Another issue the Club takes with the Jefferies note is the reasoning behind the downgrade. The analyst argued that demand for Apple’s new iPhone 17 and Air lineup is already priced in the stock, which has caused unrealistic expectations for the expected foldable iPhone 18 in 2026. Lee argued that there must be new form factors or real tech innovations to see a material increase. “Better demand for iPhone 17, partly due to a price cut on the base model, is already in the price,” the Jefferies analyst, who lowered Apple’s price target slightly to $205.16 from $205.82 apiece, wrote. “More positive sales momentum has inflated expectations on the replacement cycle and prospects of the 18 Fold.” Shares of Apple, which closed Thursday at $257, would have to drop 20% to reach Lee’s price target. Lee chimed in during “Squawk on the Street” on Friday morning as well, doubling down on his Apple call. “The smartphone industry, not just Apple, but all the Androids, are facing a much more serious structural slowdown mainly because there are no innovative current features that your current phone cannot do. I think a lot of the improvements are incremental.” The analyst continued, “We also think the foldable [iPhone] next year is pretty exciting for Apple, but, of course, it’s not a brand new form factor. It’s been around for a number of years” by other device makers. We still believe that there’s more upside for sales of its flagship device. Apple’s newest iPhone 17 and Air models, Jim has said, are huge bargains because of trade-in values combined with incentives from cellular providers like T-Mobile and Verizon . Just look at the early signs of positive demand for the latest iPhones shortly after their Sept. 9 launch. As for Lee’s critique about innovation, it’s not new. Apple bears have been saying the company has been devoid of the “wow” factor for years. We disagree and stand by CEO Tim Cook. Apple does not dominate consumer tech by being first to market. It did not invent smartphones or wireless headphones, but iPhones and AirPods have been huge commercial successes. Apple’s secret sauce is entering existing markets with products that are the best. As long as Apple keeps its edge, we are sticking by its side. “Apple is the greatest company of all time,” Jim added, citing the iPhone’s dominance in smartphones and high customer satisfaction. That’s why the Club has largely shaken off concerns about Apple. AAPL YTD mountain Apple YTD To be sure, the stock has had a rollercoaster 2025 performance, slumping for the first half of the year on worries of President Donald Trump ‘s tariffs and the company’s staggered generative AI rollout. Apple shares have turned around in recent months after Cook wisely announced an additional $100 billion investment into U.S. manufacturing to get on a better footing with the White House. In fact, Apple’s stock was our top performer in the third fiscal quarter, jumping more than 24% in three months that ended Tuesday. Shares of the iPhone maker edged higher Friday and were up more than 3% year to date. (Jim Cramer’s Charitable Trust is long APPL. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
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