An analyst for Wells Fargo & Co. (NYSE:WFC) downgraded his evaluation of Apple Inc. (NASDAQ:AAPL) from “Outperform” to “Market Perform” based on concerns about Apple’s gross margin, but he kept its valuation for shares of Apple in the range of $536 to $581.

Wells Fargo analyst Maynard Um told Street Insider that there are three major concerns about Apple.  

Um worried that Apple’s gross margin will face pressure when the company releases the iPhone 6, which some think will be in May 2014. Um said that Wells Fargo noticed that while gross margins increase when Apple releases an “s” version of the phone, such as its recent success with the iPhone 5s, the company’s gross margins tend to decrease after the launch of an iPhone with a new form factor.

Um also noted that Wells Fargo is concerned about Apple’s ability to hold onto its market share in areas where it currently competes (smartphones, tablets, etc.), though Apple could dominate new areas with rumored products like the iWatch and a new Apple TV.

Wells Fargo is also concerned that the balance of power in 2014 will shift away from producers like Apple toward carriers.

“Wireless operators have been offering generous subsidies of [about] $400 per smartphone, getting the price to consumers to [about] $250 in an effort to drive increased smartphone penetration,” Um said.

Shares of Apple closed at $561.02 on Tuesday and are currently at $553.18, down 1.4 percent from opening.