Wedbush: The China trade war is over and Apple won

From a note to clients by analyst Daniel Ives that landed on my desktop Monday:

Apple and China trade situation are joined at the hip. Given Apple’s high exposure to China from both a demand and supply chain perspective with its flagship Foxconn factory front and center, a potential draconian tariff on iPhones and related components would have been a tough gut punch to absorb for Cupertino (and its investors)…

While the next few weeks will be key for this potentially ground breaking agreement between the two countries to get sealed and remove a black cloud over the market and tech space, our near-term take is that the additional tariff around iPhones and laptops is now off the table, no further supply chain disruption will be on the horizon, closer cooperation around the growing IP theft issue in China is front and center and a potential positive for US tech vendors.

Maintains Outperform rating and $215 price target. 

My take: Ives has jumped the gun, but that doesn’t make him wrong.

One Comment

  1. Robert Paul Leitao said:

    Yes. He’s jumped the gun. But any excuse to raise the price target to $215 will do. There are several other factors that support a higher price target. Expectations of a China trade deal is just one item on the list.

    Apple’s recent services announcements will create revenue opportunities that will eventually move the proverbial needle. Combined with recent device updates and continued SOC innovation that adds to the performance capacity and functionality of Apple’s mobile platform and the shares, in my view, continue to trade in a modest range.

    Anticipated breakthroughs in health-related services, if even discounted for now, will also add value to the shares.

    It really is time for analysts to get beyond their obsession with iPhone unit sales in any given quarter or fiscal year and focus on the solutions that can provided with over a billion Apple-branded devices already in use around the world.

    1
    April 9, 2019

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