(Bloomberg) -- Apple Inc. is unlikely to feel the brunt of tariffs because the company is a key player in China's tech ecosystem and Chief Executive Officer Tim Cook has the ability to navigate such issues with President Donald Trump and lobbyists, Wedbush writes.
"We believe calls of EPS getting hit by 20%/30%+ with China being closed off as a region for Cupertino remains ‘doomsday calls' that are simply not realistic in our opinion," analyst Daniel Ives writes.
Apple is a major strategic player in the China technology ecosystem, he said, noting that the company's China-based manufacturer, Foxconn, employs 1.4 million in the region. And China represents a growth linchpin for Apple, representing 20% of all iPhone upgrades over the 12 to 18 months.
Ives sees bigger risks to sales centered around pro-Huawei sentiment and China nationalism in the near-term, which he sees relatively contained today at 3% to 5% of Chinese iPhones.
While iPhones are currently exempt from tariffs, should additional tariffs be levied, incremental costs to Apple and iPhone production could increase by about 10%.
Ives maintains his buy-equivalent rating and $235 price target.
To contact the reporter on this story: Gregory Calderone in New York at gcalderone7@bloomberg.net
To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will Daley
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