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Why This Analyst Thinks iPhone Tariff News Will Be A Near-Term Overhang For Apple's Stock

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Why This Analyst Thinks iPhone Tariff News Will Be A Near-Term Overhang For Apple's Stock
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U.S. President Donald Trump told The Wall Street Journal in an interview published Monday his administration is considering slapping a 10 percent additional tariff on Apple Inc. (NASDAQ: AAPL) iPhones and other products from China. According to Wedbush, Trump's comments won't be taken lightly amid a recent string of concerning headlines.

The Analyst

Wedbush's Daniel Ives maintains an Outperform rating on Apple's stock with an unchanged $310 price target. (See Ives' track record here.)

The Thesis

Apple's stock is now slightly lower since the start of 2018 but has been hard hit recently, Ives wrote in note. The company saying it will no longer issue iPhone guidance in earnings reports was followed by concerning data points out of Asia relating to iPhone XS and XR demand. Now, the president's tariffs threat are "out of left field" and will surely contribute to the stock's ongoing weakness.

While Trump's comments could be seen as a negotiating tactic with China ahead of expectations for a face-to-face meeting between the U.S. and China, Ives said Apple is nevertheless front and center of tariff talks -- instead of "background noise." As such, a "wait and see approach" might be the prudent approach for investors to take as Trump's comments could be "more bark than bite."

Apple's long-term story of boasting a $50 billion services business remains the key element to continue holding a bullish stance on the stock, Ives wrote. But the near-term picture is full of "dark clouds" and could continue hurting the stock.

Price Action

Shares of Apple were trading lower by nearly 1.7 percent to $171.74 early Tuesday morning.

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Latest Ratings for AAPL

DateFirmActionFromTo
Jan 2019CitigroupMaintainsBuyBuy
Jan 2019NomuraMaintainsNeutralNeutral
Jan 2019Canaccord GenuityMaintainsBuyBuy

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