Jon Hadad

About the Author Jon Hadad

Jon Hadad graduated from the University of Delaware with a degree in political science. Prior to joining the Smarter Analyst team, he was an industry analyst at a New York research firm.

Apple (AAPL): Long-Term Growth Outlook Remains Intact

Last Friday, when President Trump ordered US businesses to “immediately start looking for an alternative to China,” many eyes turned to Apple (AAPL).

Apple stock often finds itself in the crossfire between the US and China, and Friday was no different. The US tech giant manufacturers billions of dollars worth of products, including the iPhone, through manufacturing company Foxconn, which has 12 manufacturing facilities in China. While the directive is not absolute, it just adds to the tensions between the US and China — which includes Trump raising existing tariffs on Chinese products from 25% to 30%.

However, 4-star Wedbush analyst Daniel Ives doesn’t see this continuing in the long-term, as he maintains an Outperform rating and $245 price target on AAPL stock. (To watch Ives’ track record, click here)

While the US-China trade war is a concern for some investors, shares continue to climb. Apple’s stock has soared over 30% so far in 2019, and currently sitting about 10% off its all-time high. Shares took a step back last week, but investors are generally optimistic that the company will face clearer skies once tensions ultimately subside. 

Ives believes “Apple is aggressively looking at alternative options within the supply chain in light of this US/China UFC trade battle,” which includes “moving 5%-7% of iPhone production to India and/or Vietnam…which would in a best case scenario be ready to roll 18 months from now.” 

Should Apple need to take additional steps, the analyst says it would take the company at least 3 years to move 20% of iPhone production outside of its core Foxconn/China, and more than 5 years to move 50% of production out of China. 

But even amid the tensions, Ives remains optimistic on Apple. With the Trump administration recently temporarily delaying tariffs on $300 billion of tariffs, including iPhones, the analyst expects “some runway” for Apple ahead of its September launch of the iPhone 11. Further, his production estimates for this year is on par from estimates last year, indicating that, even amid the noise, the fundamentals have not changed. 

If we step back and look at the bigger picture, we can see that overall Apple stock has a ‘Moderate Buy’ analyst consensus rating. In the last three months, the stock has received 16 ‘buy’ ratings vs. 10 ‘hold’ and one ‘sell’ ratings. With an average analyst price target of $226.46, analysts are projecting upside potential of nearly 10% from the current share price. (See AAPL’s price targets and analyst ratings on TipRanks)

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