Apple less vulnerable to President Trump’s tariffs than ‘many might believe’ – Bernstein
Apple CEO Tim Cook and U.S. President Donald Trump at tech summit in June 2017
Apple is less vulnerable to increased trade tariffs from President Donald Trump, Bernstein analysts said Wednesday. Bernstein estimated that even if U.S. IT hardware companies increased prices by 20% due to higher tariffs, net profits stood to be materially impacted, especially for companies with lower gross margins.
Dell Technologies Inc. and HP Inc. appeared the most vulnerable, while IBM was likely to be the least impacted.
Bernstein analysts said Apple was less vulnerable than broader consensus would suggest, with its high gross margins able to absorb higher tariffs despite its high exposure to the tech supply chain, especially in China. The company is expected to see a 7% hit to earnings per share.
Trump has proposed steep trade tariffs on imported goods regardless of the country of origin.
On China, however, Trump has proposed a 60% tariff on all goods, and as much as 200% tariffs on goods from Mexico. While Trump may not need Congressional approval to impose the duties, the Republicans were seen winning a majority in both the Senate and the House of Representatives.
MacDailyNews Note: Bernstein rates Apple as “Outperform” (Buy) with a 12-month price target of $240.
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