Atlantic Equities analyst James Cordwell downgrades Apple (AAPL -0.5%) from Neutral to Underweight and raises his target from $235 to $275, saying the upside potential from 5G is “now more than fully priced in”.”

Cordwell: “The extent to which 5G will ignite consumer demand is far from clear, particularly in the early stages of the technology’s rollout, when coverage of millimeter wave 5G (which will deliver the real uplift in connectivity speeds) will be very limited. Costs associated with 5G could also pressure gross margins, limiting the earnings growth that actually comes through in FY21.”

The analyst thinks few services will make a real impact on Apple’s financials and that wearables are unlikely to make a major difference, even if the Apple Watch and AirPods continue to see momentum.

Related: Earlier today, Wedbush outlined its $400 bull case for Apple on its 5G and services potential.


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