One Wall Street analyst went against his bullish peers and was less than impressed with Apple’s latest iPhone unveil.
Apple’s iPhone X $999 price tag represents a “substantial increase that seems justifiable only for relatively rich people who care deeply about the appearance of their phone,” wrote KeyBanc analyst Andy Hargreaves in a note Tuesday.
Hargreaves noted that the smart phone is the most expensive mobile from Apple to date, about $300 more than the price of a new iPhone 8.
Hargreaves differs sharply with his analyst peers, who largely gushed over the more swanky model. Drexel Hamilton’s Brian White wrote that “Apple took the iPhone franchise to a whole new level with the iPhone X,” praising the company for its venture into the “ultra-luxury” smartphone market.
But the KeyBanc analyst has an even bigger reason for being cautious Apple shares than whether or not targeting wealthier customers is a good idea.
“The lack of compelling features in the iPhone X also raises longer-term concerns about Apple’s pricing power,” he wrote. “The iPhone X suggests compelling new features may be difficult to come by going forward, which could imply a period of elongating average holding periods and falling ASPs after a peak in FY18.”
But to be sure, Apple retains fierce brand loyalty as well as a strong hold on consumers through “network effects, content lock-up, and learned experience with iOS,” Hargreaves acknowledged, an environment costumers would be hard-pressed to leave.
Apple shares were up nearly 40 percent this year into the release. However, the stock finished Tuesday 0.4 percent lower following the announcement and fell another 1 percent in early trading Tuesday as investors appeared to side more with Hargreaves than the majority of his peers.
The analyst has a sector weight rating on Apple.