Apple Inc. was started with an underperform rating at Wolfe Research, with the firm expressing a cautious view over the iPhone maker’s prospects just days before it is scheduled to report its third-quarter results.

“We do not expect a 5G supercycle, argue against an independent services valuation, and do not consider Apple a stronger company on the other side of the pandemic,” wrote analyst Jeff Kvaal, who issued a US$315 price target on the stock.

Shares of Apple fell as much as four per cent on Friday, although it pared much of that decline and last traded down 0.8 per cent. The stock has risen more than 60 per cent off a March low; Wolfe argued that Apple’s fundamentals “can’t support the move” seen over the past few months.

Much of Apple’s recent advance has been related to the upcoming launch of a 5G version of the iPhone. Wolfe downplayed the tailwind this product could represent. “We believe Apple’s iPhone 12 orders into its supply chain are flat to below last year’s iPhone 11 orders,” the firm wrote. It added that iPhone sales “decelerated sharply during the 2008 recession,” a trend that suggested similar weakness in the current economic environment.

Bearish ratings on Apple are somewhat rare, as only four firms tracked by Bloomberg recommend selling the stock. To compare, 29 firms have a buy rating and nine have a neutral view.

However, Wolfe is not the only firm to express skepticism about the scale of Apple’s recent advance. Earlier this month, Deutsche Bank confessed it was “surprised at both the speed and magnitude of the rebound” in Apple shares, adding that the move “has us nervous.” The average analyst price target stands at nearly US$373. While this is up from US$305 at the end of April, it suggests upside of just one per cent from the current share price.

Apple is scheduled to report third-quarter results on July 30.