Paradis Paul, director & president at Sezzle, sells $472k in shares
On Thursday, Raymond (NSE:RYMD) James reaffirmed its positive stance on Apple Inc. (NASDAQ:AAPL) shares, maintaining an Outperform rating and a $250.00 price target. Currently trading at $204.46, InvestingPro analysis suggests the stock is slightly overvalued, though analyst targets range from $197 to $325. The firm’s analyst highlighted the challenges Apple faces due to significant reciprocal tariffs, with over 90% of its hardware products being manufactured outside the United States. The majority of Apple’s products are made in China, which now encounters a combined tariff rate of 54%, while a portion of its hardware produced in India faces a 26% tariff.
The Americas region contributed to 43% of Apple’s sales in fiscal year 2024, with approximately 25-28% of the company’s total sales attributed to U.S. products. With trailing twelve-month revenue of $395.76 billion and an EBITDA of $137.35 billion, Apple maintains strong financial health according to InvestingPro metrics, which show a robust overall score of 2.82. The analyst pointed out that while there may be exemptions for U.S.-sourced components, it is assumed that the entire bill of materials (BOM) would be subjected to tariffs. An analysis by Raymond James suggests that the net impact on Apple’s calendar year 2025 earnings per share (EPS) could be as much as 25% on a pro-forma basis, assuming the tariffs take effect from January 1, all other factors being constant.
Despite Apple’s large scale and its expanding manufacturing footprint outside of China potentially helping to mitigate some of the tariff impact, the base case scenario anticipates Apple to increase its prices. According to the firm’s estimates, Apple would need to raise U.S. hardware prices by about 30% to fully offset the tariff impact on its EPS. However, there are concerns about the risk of demand reduction in the U.S. market, and the potential for retaliatory tariffs that could affect Apple’s product sales in other countries.
For the time being, Raymond James is not altering its estimates for Apple as it awaits more details on the duration of the tariffs and the company’s potential pricing and cost strategies. The analyst’s comments reflect a cautious but watchful approach as the situation develops, with the current Outperform rating and price target remaining in place amidst the unfolding tariff scenario. InvestingPro subscribers can access 12 additional key insights about Apple, including detailed analysis of its financial health, valuation metrics, and growth prospects through the comprehensive Pro Research Report, available exclusively on the platform.
In other recent news, Apple Inc. has been the focus of several significant developments. Jefferies analyst Edison Lee maintained an Underperform rating on Apple, with a price target of $202.33, primarily due to concerns about the impact of China tariffs on Apple’s financials. Meanwhile, Tigress Financial Partners expressed optimism, maintaining a Strong Buy rating and raising their price target to $300, citing Apple’s growth in services and innovation. Additionally, Visa (NYSE:V) has made a $100 million bid to replace Mastercard (NYSE:MA) as the network for the Apple credit card, as Goldman Sachs plans to exit the consumer lending sector.
Apple’s earnings and revenue have been under scrutiny, with a UBS analyst highlighting a 1% decline in global iPhone sell-through in February, especially in China and Europe. Despite these challenges, Apple saw iPhone growth in India and other markets, with a 20% year-over-year increase. Financial journalist Herb Greenberg criticized Apple’s product quality and strategy, pointing out concerns about product issues and the company’s financial focus on stock buybacks and dividends. Lastly, the competition for Apple’s credit card network is heating up, with American Express (NYSE:AXP) also vying for a dual role in the partnership.
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