The iPhone 8 Won't Help Apple

The downgrade is a longer-term thesis and not based on the company's upcoming earnings report. Specifically, the main concern stems from investors hoping Apple's iPhone will experience at least a 10 percent year-over-year unit growth rate led by the iPhone 8 cycle in the bottom half of 2017.

Justification For Downgrade

Another Headwind

"Our view is that customers increasingly mixing down (IP6S in favor of IP7) and maturation of the device-centric consumer electronics adoption wave could weigh on both Apple and the smartphone market," Zero Hedge quoted the analysts as saying in their report.

Furthermore, the analysts are calling for the global smartphone market to see a decline of 0.4 percent in terms of revenue and a growth of 5.5 percent in terms of unit growth. By comparison, the analysts are expecting Apple's iPhone related revenue to grow by 4.5 percent in 2017 on unit growth of 3.4 percent.

Based on the analysts estimates, Apple's projected growth rate is not enough to boost the stock's valuation multiples. As such, investors should wait for Apple's next leg of growth, which is likely to come from opportunities in India, services, enterprise, artificial intelligence and the Cloud. However, none of these 'winds are expected to emerge within the next 12 months so investors shouldn't expect any "meaningful upside potential" in Apple's stock for the time being.