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) WWDC Overshadowed by China Fears; Wedbush Remains Bullish on the Stock


Today, Apple (AAPL) kicked off its annual WWDC, which has been the platform of choice for the company to announce new products and services. Ahead of the big event, many expected the tech giant to announce new operating systems for iPhone, Mac, Watch and TV, and maybe even new hardware (though this isn’t widely expected). There is also a lot of talk about how Apple will be affected by the U.S.-China trade war, should China decide to retaliate and ban Apple sales to the tune of 29% of earnings per share.

Wedbush analyst Daniel Ives believes investors do not have “much to worry about,” even as the Apple faces a number of headwinds, including the US-China trade war, a Supreme Court lawsuit and its most important product cycle in a decade on both the hardware/streaming service front.

Ives reiterated his Outperform rating on Apple stock, with a $235 price target, which implies nearly 33% upside from where the stock is currently trading. (To watch Ives’ track record, click here)

The analyst doesn’t expect WWDC to feature any official product releases per usual, but does “expect some major hints around the next version of Mac Pro,” which he believes “could be hitting the ground over the coming months.”

Ives believes WWDC this year “will have a different feel as Apple needs to prove with its next iOS, currently codenamed Yukon, that this platform has the speed, scalability, and feature functionality to smoothly support and lay the groundwork for the company’s flagship video streaming service slated for the fall.”

Beyond the conference, Ives believes the “actual implications” of the trade war with China “have been tangential as we have not seen any major shifts in China demand/iPhone sales thus far through late May.” Ives points out that “Apple will not have major roadblocks ahead despite the loud noise,” as the company employs more than 1 million workers through Foxconn in China.

But should “Apple [feels] the noise in China,” Ives says the more pressing concern is around “any hit in demand.” Further, the analyst says it would be an issue if “any pro Huawei sentiment/Chinese nationalism negatively [impact] sales in the near term,” which he believes “is a contained situation.”

All in all, Apple relies heavily on China, so many will be watching this conflict closely; shares are already down 15% since the beginning of May. But nevertheless, TipRanks analysis of 37 analysts shows a consensus Moderate Buy rating, with 18 analysts recommending Buy, 17 on the sides and two suggesting Sell. The 12-month average price target of $214.90 reflects a 23% upside from its current price. (See AAPL’s price targets and analyst ratings on TipRanks)

 

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