Raymond James analyst Tavis McCourt has modeled how Apple’s (NASDAQ: AAPL) earnings per share (EPS) will be affected if Apple’s worst-case scenario becomes reality. Tavis McCourt is a four-star rated analyst according to financial accountability engine TipRanks.

“As if trying to forecast iPhone sales isn’t hard enough (even Apple seems to have a hard time),” writes McCourt, “investors are suddenly thrust into trying to understand earnings impacts of potential events such as changes in U.S. and European tax policy and trade policy with China.”

Worst-case scenario

According to McCourt’s calculations, in the worst-case scenario Apple’s annual EPS would fall to $5 from the current $8.31 for fiscal 2016. Share prices, which are currently at $115.82, would potentially drop 37% to $72.

McCourt used five different variables to model the worst-case (and subsequently the best-case) scenarios for Apple. The worst-case scenario for Apple includes no change to the notoriously high 35% US corporate tax rate and having to pay the 12.5% EU tax of $14.5bn.

EU tax bill

McCourt’s model shows that just the EU tax bill could bring Apple’s EPS down to $8.19. Apple and Ireland are currently appealing the EU tax bill which the tech giant was ordered to pay at the end of August 2016. The EU says the ‘sweetheart’ deal between Apple and Ireland constituted illegal state aid.

However senior Apple execs subsequently claimed that EU regulators dismissed tax experts and corporate law to maximize the proposed penalty and attract media attention.

Chinese trade war

A hypothetical Chinese trade war is a crucial contributor to the worst-case scenario outlook. Apple is particularly vulnerable to any trade war between China and America as China is both a manufacturing hub and an important consumer market. A Chinese trade war alone could bring Apple’s EPS down to $6.17, says McCourt.

Most recently, Trump has been reportedly considering a 10% tariff on all imports according to CNN, and China has threatened to impose corresponding tariffs. The result of a trade war could be higher prices for Apple products and decreased demand.

Best-case scenario

In contrast, McCourt’s best-case Apple scenario projects an annual EPS of $13.20 and an assumed share price of $198- a difference of $126 from the worst-case scenario model and an $83 increase from the current share price.

The best-scenario focuses on what will happen to Apple’s EPS if its appeal of the $14.5bn tax bill is successful. Other factors in the best-case scenario include no US/ China trade war and repatriation of huge offshore profits coupled with a new US corporate tax rate of 15%.

Repatriation of profits

Once profits are repatriated, Apple will be required to pay billions of dollars in deferred tax to the US so a lower corporate tax rate of 15% would make a significant difference to AAPL. In fact, just the repatriation and low tax rate could take Apple’s annual EPS up to $11.85 according to McCourt.

And, although not included in McCourt’s model, Trump has recently muted a special repatriation corporate tax rate of just 10% in order to try and bring cash back to the US.

The outcome

McCourt was clearly reassured by the modelled outcomes as he reiterated his Buy rating for Apple on Dec 19. He did not give a price target.

According to TipRanks, which measures financial experts’ success rate based on how their calls perform, Tavis McCourt is ranked #819 out of just over 4,300 analysts. McCourt has a 57% success rate and makes 4.3% in his annual returns. However, when recommending AAPL, McCourt yields 24.7% in average profits on the stock with an impressive success rate of 77%.

Consensus Apple opinion

TipRanks analytics exhibit AAPL as a consensus Strong Buy. Out of 26 analysts polled by TipRanks in the last 3 months, 21 are bullish on Apple stock. There are no sell recommendations. With an upside of 15.94%, the stock’s average analyst target price stands at $134.28.