Apple shares could drop 20% as sales of the iPhone slow in the second half of this year and sales of the upcoming Apple Watch are not able to make up for the decline, according Mizuho Securities analyst Abhey Lamba, who shared the view in a note on Thursday.

Apple Inc. Stock May Fall 20% On Slow iPhone, Watch Sales [REPORT]

Apple Watch sales may not match expectations

Mizuho’s expectations of below-par sales of the Apple Watch, expected in March at $350 a unit, are based on Apple’s own supply chain checks and not on a consumer survey.

Lamba said, “While F1Q15 results will likely be extremely solid and March guidance could indicate continued momentum,” iPhone sales will drop more than normal later in the year. Also Apple Watch sales will be below par, and other products will hardly contribute to compensate for the slowdown in the iPhone sales, according to the analyst.

Lamba believes the Cupertino, Calif.-based company knows its Apple Watch might not be the hottest product and is therefore manufacturing fewer units than expected by Wall Street. The note reads that the company is not expecting huge demand, and “Apple Watch build plans are significantly below current expectations of 15-25 million units.”

iPhone sales unmatchable

Lamba dropped the firm’s rating on the world’s biggest company from Buy to Neutral. Apple shares surged by around 40% in 2014 to a record high. Lamba has suggested a price target of $115, an increase of $5 above Wednesday’s closing price, noting that “downside” for the stock could be somewhere in the mid-80s.

In fiscal 2014, Apple shares outperformed the market as consumers flocked to purchase the iPhone 6 and the bigger iPhone 6 Plus. The iPhones are the most profitable product for the company with a gross margin in the range of 49% and 58%. However, Lamba feels that Apple is the one that will be thwarted most by its success because it will not be able to add enough iPhone 6 users this year to justify its valuation.

According to Lamba, sales of Mac computers as well as apps for the iPhone are major contributors, but the iPhone is the top contributor above all other segments. The analyst added that Apple earns around half of its revenue and approximately two-thirds of its gross profits from the iPhone. Apple’s share price is highly correlated with iPhone sales, and a slowdown in shipments could work against the stock.