Buy Apple (AAPL) on Saber Rattling with China - Drexel Hamilton

Drexel Hamilton analyst Brian White sees a buying opportunity in Apple (NASDAQ: AAPL) amidst the 'saber rattling' with China.

White notes shares are down 3% today and 11% since the company reported 4Q:FY16 results in late October. He notes this morning an article in the Global Times indicated that U.S. brands and entire industries would "suffer a setback" in China if President-Elect Trump imposed a 45% tariff on Chinese imports, including "iPhone sales". The article is in reaction to statements from President-Elect Trump regarding a 45% tariff on imports from China.

"Given the importance of trade relations between the U.S. and China, we are doubtful that a major trade disruption is in the cards and feel confident in Apple's opportunity in China (22% of FY:16 sales from Greater China)," White said.

The analyst said manufacturing the iPhone in volume in the U.S. is unrealistic as many consumers would no longer be able to afford to buy an iPhone due to higher manufacturing costs. In addition, they believe finding the workers with the willingness and skill set to assemble an iPhone in the U.S. at the volume levels required by Apple would be an insurmountable task.

The firm maintained a Buy rating and price target of $185

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $108.43 yesterday.

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