Apple, Inc. (Nasdaq: AAPL) stock is down 3.3 percent in a week on concerns that the escalating trade war between the U.S. and China could take a bite out of Apple’s iPhone sales.
Apple may have more exposure to the China market than its mega-cap U.S. tech peers, but analysts still see any trade war-related weakness in AAPL stock as a buying opportunity for long-term investors.
[See: The 10 Most Valuable Tech Companies in the World.]
After the U.S. and China exchanged new sets of tariffs on $50 billion of each other’s goods last week, President Donald Trump said on Monday that he is exploring the possibility of adding new tariffs on another $200 billion of Chinese goods in coming weeks.
Apple investors are understandably concerned China will single out Apple if the trade war escalates further. Last year, roughly 20 percent of Apple’s total revenue came from China, where it sold more than 41 million iPhones. Apple also operates roughly 40 stores in China.
In addition to tariffs, Apple could face potential supply chain disruptions if the Chinese government chooses to restrict its business with suppliers. Taiwanese company Foxconn assembles iPhones in China as well.
Fortunately for Apple, analysts say Trump is under immense pressure not to let the trade war drag on too long.
Height Capital Markets analyst Clayton Allen says Republicans in Congress will have little patience for negative trade war headlines that could potentially undermine their message to voters highlighting a successful tax reform and a booming economy heading into the midterm elections in November.
“China’s President Xi Jinping, facing no significant domestic political threat following the announcement that he will serve as president for life, can outlast Trump, who must contend with the backlash from farmers and other groups negatively impacted by a trade war,” Allen says.
[See: 9 Ways to Invest in Red-Hot Tech Stocks.]
With Trump under pressure to bring the trade war to a timely end before November, GBH Insights head of technology research Daniel Ives says long-term investors should be thinking about the future.
“We would be buyers of Apple/FANG brethren, as we believe the underlying fundamentals and healthy consumer and IT spending environment should drive further multiple/earnings expansion as the Street digests the unparalleled growth dynamics for tech stocks set to play out over the next six to 12 months,” Ives says.
GBH Insights has a “highly attractive” rating and $200 price target for AAPL stock.
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Trade War Is an Opportunity For Apple Inc. (AAPL) Stock Investors originally appeared on usnews.com
