From a note to clients by analyst Samik Chatterjee that landed on my desktop Tuesday:
Apple shares have traded off -11% since the start of last week on resurfacing worries relating to the imposition of tariffs on imports from China on a wider scope of items than the current $200 bn of goods, as well as concerns driven by the unfavorable outcome of recent lawsuits. While it is difficult to precisely attribute the magnitude of the share price decline between tariffs and the lawsuits, we think it is fair to say that the majority of the share price decline is driven by tariff concerns. Given that till date there has been limited impact from the tariffs on Apple’s hardware products, and likelihood of outsized losses from recent lawsuits appears limited, we believe the share price reaction can be seen as largely an overreaction; although at the same time, the estimated -14% EPS impact from the imposition of tariffs on all hardware products and the potential modest losses from the lawsuits suggest that there could be more downside on AAPL shares in the near-term were sentiment around US-China trade talks to worsen further.
Maintains Overweight rating and $235 price target.
My take: J.P. Morgan is the first big bank I’ve heard from this week. It’s been bullish on Apple since last summer, when Chatterjee took over from Rod Hall (now at Goldman Sachs).
See also: A good day for Apple buybacks