Needham: tariff uncertainty increases Apple's (AAPL) FCF risks

Needham analyst Laura Martin reiterated a Buy rating and $225.00 price target on Apple (NASDAQ: AAPL).

The analyst commented: "We expect AAPL to rise by 5%-10% on Monday owing to 90-day tariff exemptions on smartphones, laptops, etc - announced last Friday, April 11. However, on Sunday (April 13), Commerce Secretary Howard Lutnick stated that tariffs on semiconductors are coming soon.

We believe that Friday's exemption is an investment positive for AAPL, but that tariff uncertainty increases AAPL's FCF risks, owing to:

Higher costs (eg, AAPL reportedly air-lifted 1mm iPhones to the US from India in March);
FX instability disrupts component sourcing, adding costs;
Adds revenue risk to AAPL's 17% of sales from China in FY24;
Falling consumer confidence may lead AAPL to cut prices to maintain demand; and,
Lower FCF visibility raises AAPL's equity risk premium."

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 $198.15 yesterday.

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