Wells Fargo analysts take a dive, offering an astute overview into why Apple Inc. (NASDAQ:AAPL) has been downgraded amid a recent bullish investor parade and why an upcoming Investor Day could act as a growth driver for Philip Morris International Inc. (NYSE:PM) shares. Let’s take a closer look:

Apple Inc. 

Wells Fargo analyst Maynard Um took an unusual direction in the midst of recent bullishness on Apple, and recently downgraded the tech giant from an Outperform to a Market Perform rating.

Despite feedback questioning whether Um has taken into account the iPhone 8 cycle, which investors anticipate will yield a substantial boost in units, Um reiterates a Market Perform on shares of AAPL with a valuation range of $105 to $120, which represents an 8% downside to a nearly 5% upside from where the stock is currently trading.

Those who sing the praises of Apple believe that “even a modest upgrade rate of the 500MM+ iPhone user base would result in up year over year units.” Yet, the analyst denies this as the ideal approach to modeling iPhone units, highlighting “two inherent flaws.”

First, Um notes that those who are bullish point to the 500MM iPhone user base, to which the analyst takes apart as not all being deemed “eligible,” when considering “hand-me-down iPhones,” for example.

Second, Um argues this mindset “ignores the cyclicality and subscriber eligibility evident from our proprietary units per carrier analysis, which suggests the iPhone 8 may have headwinds.”

Additionally, the analyst predicts a 2018 cycle impact from carriers who presently offer free iPhone 7 promotions, adding that if a user opts to upgrade, it might not be ideal, as the user’s monthly bills would subsequently rise.

As such, Um asserts, “We continue to believe the most accurate way to forecast iPhone units is to look at units per carrier.”

“We maintain our Market Perform rating as we believe there will be mounting concern over the March and June quarters and, while recent data points have been positive, believe they may not be as bullish as the headline data suggests,” Um concludes.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, five-star analyst Maynard Um is ranked #176 out of 4,189 analysts. Um has a 66% success rate and garners 14.2% in his yearly returns. When recommending AAPL, Um earns 19.4% in average profits on the stock.

TipRanks analytics exhibit AAPL as a Strong Buy. Based on 36 analysts polled in the last 3 months, 31 rate a Buy on AAPL, 4 maintain a Hold, while 1 issues a Sell. The 12-month price target stands at $127.83, marking a nearly 12% upside from where the shares last closed.

Philip Morris International Inc.

Philip Morris International Inc. (NYSE:PM) will be hosting an Investor Day in Lausanne, Switzerland on September 29th and September 30th. From Wells Fargo analyst Bonnie Herzog‘s perspective, this could prove to be a “positive catalyst” for the cigarette giant’s stock.

As such, Herzog reiterates an Outperform rating on PM with a valuation range of $114 to $116, which represents a 12% increase to a 14% increase from where the shares last closed.

The analyst anticipates the company will offer a close overview of its reduced-risk platforms (RRPS) led by iQOS, which Herzog sees as prospectively bumping up growth targets, coupled with underscoring key drivers of growth in PM’s core combustible business.

Particularly in light of foreign exchange (forex) headwinds that continue to lessen, Herzog would not be surprised if management lowers its negative $0.43 per share forex guidance on the EPS estimate for the fiscal year of 2016, even by as much as $0.05 per share, as well as reiterates its 10 to 12% forex neutral EPS growth outlook for the fiscal year of 2016. Currently, the analyst projects 10.8% as a forex EPS growth outlook estimate for the fiscal year of 2016.

“We also believe PM’s recent 2% dividend increase could suggest a reinstatement of its share buyback program sooner than later. Bottom line – We continue to view PM as best-in-class and reiterate it as our top long-term tobacco stock pick given its: (1) improving underlying fundamentals, (2) iQOS opportunity, (3) easing F/X headwinds, (4) strengthening FCF position, (5) attractive dividend & eventual share buyback program, and (6) double-digit currency-neutral EPS growth reflecting greater potential for upside to earnings than downside risk,” Herzog concludes.

According to TipRanks, four-star analyst Bonnie Herzog is ranked #450 out of 4,189 analysts. Herzog has an 88% success rate and garners 13.0% in her yearly returns. When recommending PM, Herzog gains 8.1% in average profits on the stock.

TipRanks analytics demonstrate PM as a Buy. Based on 5 analysts polled in the last 3 months, 3 rate a Buy on PM, while 2 maintain a Hold. The consensus price target stands at $106.50, marking a nearly 5% upside from where the stock is currently trading.