Apple Inc. (AAPL): Jefferies maintains Underperform on Apple as weak iPhone 18 Pro resale prices outweigh a mixed lead-time rebound

Overview

This Apple update assesses early iPhone 18 Pro and Pro Max demand through resale prices and delivery lead times, while examining adoption barriers for the DUO device in China. Jefferies maintains Underperform, placing greater weight on weak resale values than on the recent improvement in lead times.

Core views

Jefferies argues that weak year-on-year resale pricing is the clearest early indication that iPhone 18 Pro and Pro Max demand is softer than that of the iPhone 17 Pro and Pro Max at the comparable point last year. Its Hong Kong tracking shows iPhone 18 Pro resale prices implying discounts for almost all variants. For the iPhone 18 Pro Max, resale premiums dropped sharply on launch day and then remained low or declined further. As of September 27, the 256GB Pro Max was the sole variant retaining a meaningful premium, at about 8% above Apple's official selling price; premiums for other variants were materially below those for the iPhone 17 Pro Max a year earlier. The report highlights particular weakness in the 1TB and 2TB iPhone 18 Pro and Pro Max models. It suggests that US$400–500 price increases may exceed consumers' perceived incremental value. It also notes Apple's switch from TLC to lower-cost QLC NAND in the 1TB and 2TB models, which could make storage performance less attractive. Together, these factors may be contributing to weaker resale-market appetite for the highest-capacity configurations. Lead times provide a more mixed signal. Lead times for both iPhone 18 Pro and Pro Max fell across almost all tracked markets early in the week, then generally rebounded over the weekend. As of September 27, iPhone 18 Pro Max lead times were longer year on year in Hong Kong/China and the United States, shorter in the United Kingdom and Germany, and flat in Japan. For iPhone 18 Pro, lead times were longer in Hong Kong/China, shorter in the United States and Germany, and flat in the United Kingdom and Japan. Jefferies calls the rebound encouraging but cautions that it may result from tighter supply as Apple ramps DUO production ahead of October 23 deliveries, with pre-orders beginning October 16, rather than from a clear demand improvement. DUO is generating substantial early interest, but Jefferies identifies China-specific eSIM restrictions as a barrier to wider adoption. DUO is eSIM-only because of its slim form factor, like the iPhone 17 Air, which the report says has not sold well. Although eSIM received official approval in China last October, users must register in person at operator stores. China DUO supports only two eSIM numbers, compared with up to eight on eSIM-capable iPhones in Hong Kong. This is consequential for consumers who maintain multiple numbers for work and personal use, and for frequent travelers: a user already using two Chinese numbers may need to suspend one through an in-person visit to add a travel eSIM, then make another visit to reactivate it after returning. Jefferies believes status-driven, high-end early adopters may still buy DUO, but the inconvenience could obstruct broader adoption, especially if buyers expect a second-generation regular-sized foldable in 2027. For valuation, Jefferies states that its 12-month forward price target is based on a DCF through FY31E using a 7.8% WACC and a 4.3% terminal growth rate, implying 28.8x FY31E P/E. The valuation also implies 30.0x FY26E P/E and 3.0x FY26E PEG. Despite this framework, the update's operating conclusion remains cautious: resale-price evidence currently carries more weight than the ambiguous lead-time data, supporting the maintained Underperform rating.

Analysis framework

Jefferies tracks secondary-market resale prices and official delivery lead times across major markets to assess early iPhone demand. It compares iPhone 18 Pro and Pro Max indicators with the iPhone 17 generation at the same point last year, separates potential demand effects from supply-driven lead-time changes, and evaluates DUO adoption through China's eSIM rules and user behavior. Its valuation uses a discounted cash flow framework through FY31E.

Methodology notes

• Industry AnalysisSupply-demand framework

  Resale-price and delivery-lead-time tracking

  The report treats resale premiums or discounts as an early demand signal and interprets lead times alongside potential supply constraints, rather than assuming longer waits automatically mean stronger demand.

• Valuation methodsDCF (Discounted Cash Flow)

  DCF valuation through FY31E

  Jefferies discounts projected cash flows through FY31E using a 7.8% WACC and 4.3% terminal growth rate to support its 12-month forward price target.

• Valuation methodsP/E and PEG Valuation

  Implied P/E and PEG cross-checks

  The report expresses the resulting valuation as 28.8x FY31E P/E, 30.0x FY26E P/E and 3.0x FY26E PEG.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Apple Inc. (AAPL)

  Primary covered company; iPhone 18 demand indicators and DUO adoption conditions underpin Jefferies' maintained Underperform view.

  Strengths

  DUO is generating significant excitement, and longer lead times in some markets are an encouraging signal.

  Weaknesses

  Weak resale pricing points to softer year-on-year iPhone 18 Pro and Pro Max demand; high-capacity variants appear particularly weak.

  Comparison

  iPhone 18 Pro and Pro Max resale premiums are materially weaker than those of the iPhone 17 Pro and Pro Max at the comparable point last year, except for the 256GB Pro Max.

  Risks

  Apple Intelligence gaining traction in 2027, stronger-than-expected iPhone 18 Fold demand, or memory prices falling after peaking at the end of 2026 could support a more favorable outcome.

Key data

• iPhone 18 Pro Max 256GB resale premium~8%Above Apple's official selling price as of September 27; the only Pro Max variant with a meaningful premium.
• High-capacity model price increasesUS$400/500Jefferies cites these increases as potentially too steep relative to perceived incremental value.
• China DUO eSIM capacity2 eSIM numbersCompared with up to eight on eSIM-capable iPhones in Hong Kong.
• DUO pre-orders and deliveriesOctober 16 / October 23Pre-orders start October 16 and deliveries begin October 23.
• DCF WACC7.8%Applied in Jefferies' valuation through FY31E.
• Terminal growth rate4.3%Used in the DCF valuation.
• Implied FY31E P/E28.8xImplied by the DCF valuation.
• Implied FY26E P/E and PEG30.0x P/E; 3.0x PEGValuation measures cited by Jefferies.

Impact & implications

Jefferies believes weak resale values currently provide the more reliable signal on iPhone 18 Pro and Pro Max demand. The delivery-time rebound does not yet overturn that conclusion because DUO supply ramping may be affecting availability. China eSIM restrictions could confine DUO demand more to early, status-oriented buyers and constrain broader adoption.

Risks

• Apple Intelligence could gain traction in 2027 and drive stronger demand for iPhone 18 and iPhone 19.
• Demand for iPhone 18 Fold could be stronger than Jefferies expects.
• Memory prices could peak at the end of 2026 and decline thereafter.

What to watch

• Whether iPhone 18 Pro and Pro Max resale premiums recover relative to the iPhone 17 generation.
• Whether lead-time changes remain elevated after DUO production ramps, clarifying demand versus supply effects.
• DUO pre-orders from October 16 and deliveries from October 23.
• Whether China's eSIM rules limit DUO adoption beyond high-end early buyers.