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tim cookApple CEO Tim Cook.Rick Wilking/Reuters
  • Apple is coming out of a strong final quarter in 2017, and sales of its iPhone X flagship seem to be going well.
  • However, the firm’s stock has historically taken a hit following the launch of “tick” iPhone models, like the iPhone 5 and iPhone 6.
  • Most analysts believe that the radical differences of the iPhone X as a product might create a so-called “supercycle,” but an analyst at Instinet downgraded Apple’s stock on the premise that it will still collapse following its historical trend.

Apple has received a rare downgrade of its stock.

Jeffrey Kvaal, an analyst at Nomura’s Instinet brokerage agency, sent out a note this morning warning about Apple’s supposed slowdown, and moved the company’s stock rating from a “Buy” down to “Neutral.”

“We argue that the stock’s gains for the iPhone X supercycle are in the late innings,” the note reads. “We believe unit growth, if not quite ASP growth, is well anticipated by consensus and a historically full multiple.”

And that’s not all; Kvaal also noted that Apple’s services arm, albeit being a growing business, still only accounts for about 15% of the company’s overall operations. And, most of all, it’s dependent on hardware sales.

The iPhone X is in a tricky position, for two main reasons.

For one, it has come in what would typically be a “tock” year for Apple (where the revised iPhone 4S, 5S, and 6S have launched), but it instead launched alongside the iPhone 8 and 8 Plus (and not 7S and 7S Plus, as might have been expected), and this alone might have influenced the usual pattern of Apple’s stock.

Then there’s the fact that the iPhone X is a radically different product, which Apple billed as “the future of the smartphone.” This is why analysts and investors started to talk about a “supercycle,” where the bulk of customers coming from the older iPhone 6 and 6S — alongside smaller batches of iPhone 7 and Android phone owners — were predicted to move en-masse towards the iPhone X.

Apple StockThe graph shows how Apple’s stock has historically stumbled after the launch of “tick” models, such as the iPhone 5 and 6; Kvaal expects the iPhone X to be no different.FactSet/Instinet Research

But Kvaal begs to differ. “The shares fell 41% after the iPhone 5 launch and 27% after the iPhone 6. The shares obviously recovered, though only after approximately 20 months in each case,” the note reads.

“We argue this cycle is not different; we do not expect the services business or tax reform to be sufficient to flout the historical pattern.”

Other analysts, on the other hand, are mostly bullish about Apple and its stock. The reaction to the iPhone X launch sent Apple watchers into a frenzy, and so far Apple’s stock has continued to perform well.

On the latest earning call for 2017’s latest quarter, CEO Tim Cook said that the firm was “firing on all cylinders,” and the reported recent overrun of early production issues with the iPhone X reinforced the image of a healthy company.

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