Market Overview

Wedbush: Apple's Stock Could Gain $20-$25 From US-China Trade Deal

Wedbush: Apple's Stock Could Gain $20-$25 From US-China Trade Deal

The Sino-American trade dispute and near-term developments could prove to be a "major swing factor" for Apple Inc. (NASDAQ: AAPL), according to Wedbush.

The Analyst

Daniel Ives maintained an Outperform rating on Apple with an unchanged $235 price target.

The Thesis

A trade resolution at the upcoming G-20 summit between the U.S. and Chinese governments could translate to Apple's stock moving higher by $20 to $25 per share in the coming months, Ives said in a Thursday note. (See his track record here.)

A resolution would remove a "dark cloud" hovering over Apple's stock, which currently reflects a long-term risk to Apple's numbers and the potential for growing nationalism in China that boosts demand for local smartphones at the expense of the iPhone, the analyst said. 

The trade dispute and corresponding supply chain tariff disruptions could impact Apple's earnings power by 10% to 15% over the coming years, Ives said, adding that Apple has become the "poster child" for the trade dispute, right or wrong.

The Street's sentiment may be more negative than how the trade tensions will ultimately play out, implying a "compelling" risk-reward profile for Apple, the analyst said.

Apple appears to be the "most safe" company among the FAANG group in terms of antitrust sentiment and potential regulatory changes at the government level, according to Wedbush. 

Price Action

Apple shares were down 0.73% at $192.74 at the close Friday. 

Related Links:

Legal Expert Breaks Down Antitrust Risk For Big US Tech Stocks

Analysts: China Isn't Targeting Apple In Trade War

Photo by Daniel Lu/Wikimedia

Latest Ratings for AAPL

Dec 2019MaintainsOutperform
Dec 2019Initiates Coverage OnBuy
Dec 2019MaintainsOverweight

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