Tariff interruptus: What the Apple analysts are saying

Excerpts from the notes I’ve seen. More as they come in.

Amit Daryanani, Evercore: Tariffs Delayed (For Now). The delay is an incremental positive for Apple as we have previously estimated tariffs could negatively impact AAPL’s EPS by 4-8% (under 10% scenario) and 10-20% (under 25% scenario). Net/Net: We maintain our OP rating and $238 target on AAPL as we see a confluence of a) services acceleration, b) gross margin upside, c) capital allocation and d) reasonable Sept-qtr bogey as enablers for stock upside. Outperform. $238. 

Daniel Ives, Wedbush: Tariff Overhang Removed for Apple in the Near-Term; Good News. For Apple, which has become the poster child of this US/China UFC trade battle, this is a major shot in the arm for the bulls as importantly Cook & Co. will be facing no tariff noise/costs when the trifecta of iPhones launch in the September time-frame. Since President Trump announced in early August that this 10% tariff will be placed on the $300 billion of Chinese goods, all investor eyes have been on Apple and how the company will handle this shot across the bow. Cook was either going to have to pass this incremental cost along to US consumers and hurt overall iPhone unit demand in the midst of a crucial upgrade cycle, or absorb (which we believe was the likely option) the 10% and take a hit to the bottom line; representing a huge fork in the road scenario of Apple. Outperform. $245

My take: Slim pickings so far. To quote friend-of-the-blog Jeff F,

Anyone who didn’t see this coming isn’t paying attention.

7 Comments

  1. Roger Schutte said:

    Wait. I thought the tariffs were paid by China and the Billions of dollars are beneficial to the USA? What gives?

    /s

    4
    August 13, 2019
  2. Ralph McDarmont said:

    I am grateful that ped avoids politics. But tariff man is a moron on so many levels that I cannot keep track, nor can I stay silent.. Trump and his ilk are purely clueless and destructive. I never imagined that one idiot could upset an entire global economy. Ouch and condolences to so many investors caught in the storm.

    8
    August 13, 2019
  3. Dan Scropos said:

    When elected, they said:

    Economy would tank-wrong
    Stock market would tank-wrong
    Inflation would soar-wrong

    This tariff war will probably be added to the above list as well. We have no idea what’s going on behind the scenes. President Trump and Tim Cook both know the Chinese culture well, and it’s largely grounded in honor. I’m guessing Tim Apple is advising to some extent.

    The president may have to publicly make a few concessions, but that doesn’t necessarily mean that he’s not privately getting what he wants. As this unfolds, the scoreboard tells us a lot. China’s economy and banking system are buckling, while the U.S. has seen only minor damage. I suspect this will culminate with the U.S. being in a considerably better trade position than it was when this started. Considering the prior two presidents and how they handled China, though, that’s not saying a whole lot.

    0
    August 14, 2019

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