Apple shares fell in premarket trading Monday after Citi slashed its price target to $200 a share, saying “trade wars are bad for tech stocks.” The stock fell into the red for 2018 on Friday and is down 25 percent this quarter.
“While we do not expect Apple to miss its sales guidance we do expect consensus to come lower closer to our lowered estimates in the weeks ahead,” Citi analysts said in a note to investors. “We do not expect China to ban or impose additional tariffs on Apple.”
“However, we note that should this occur Apple has material exposure to China,” representing 18 percent of the company’s total sales, Citi added.
Apple shares fell 0.6 percent in premarket trading from Friday’s close of $168.49. Citi lowered its Apple price target to $200 a share from $240 a share.
The firm does not expect Apple to miss its own expectations for December sales but said it sees Apple reporting “towards the lower end” of $89 billion sales.
“We have found the legacy iPhones are doing better than expected due to the price reductions which makes the legacy iPhones more affordable in developing countries,” Citi said.
Citi posed the question “how low can Apple go?” In the firm’s new bear case, Citi sees the stock falling as far as $125 a share if Apple’s revenue growth slows to 2 percent to 3 percent a year and gross margins are much weaker than expected.
“In order for the stock to move higher we believe investors will await for consensus estimates to move lower,” Citi added.
