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And even if it does produce a low-end version of the iPhone, dubbed as "minis" by the bank, it will be hampered by margins, average selling prices and consumers substituting that phone for their current high-end model, he said.
"If you want 10-15 percent EBIT (earnings before interest and tax) growth for the entire iPhone business, Apple needs to ship 220 million 'minis'; add in 140 million 'maxis' and you get to 30-35 percent market share in smartphones in the 2014 timeframe," Ahmad said. "This is not unachievable but not obvious either."
He expects Apple's iPhone gross margins to decline from 45-50 percent today to around 35 percent in the next three years. He also expects Apple to start shipping a "mini" iPhone in September 2013 priced at around $300, with the price dropping to $250 in 2015.
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Apple's stock hit a 52-week low this week, closing at $425 a share on Wednesday. The stock has plummeted 40 percent since its all-time high in September last year, and has lost roughly $262 billion in market capitalization. That is almost as much as last year's reading of gross domestic product (GDP) for Greece, which was $299 billion, according to the World Bank.
"This issue of growth and margin dilution is the main reason that the Apple stock has declined from $700 to the $450 level," Ahmad said. Ongoing rumors of upcoming products from the tech giant could add to the gloom.
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Reports in February said that Apple had 100 product designers working on a watch that may run on the same software as the iPhone and iPad, signaling that the company is past the experimental period in creating the new device. Analysts have also told CNBC that a TV is being developed by Apple, with a possible launch date as early as this month.
But even these new releases might not be enough. Ahmad estimates that if Apple gains a 5 percent global market share for its TV, and 10 percent for its iWatch, it would add 10 percent and 5 percent to the revenue run-rate in the first-quarter of this year, respectively.
He expects Apple's non-iPhone business gross margins to increase from the current 28 percent to 30 percent by the end of 2015 aided by the iPad mini which he sees will improve manufacturing yield. But looking at the company as a whole he reveals that earnings estimates for the next three years are below consensus and downgrades Apple's stock to 'sell' from a 'buy', giving it a price target of $360.
"Our biggest issue with Apple's stock is the sustainability of its margin structure," he said. "We think Apple will continue to de-rate as gross margin pressure mounts in the next 18 months."
—By CNBC.com's Matt Clinch