Fears over such tariffs were highlighted Monday when President Donald Trump told The Wall Street Journal that he was prepared to slap tariffs on the rest of Chinese goods not already subject to duties, including some consumer goods such as iPhones and iPads. He also told The Journal it was "highly unlikely" that the US would exit this week's G20 summit with an agreement to hold off on increasing duties already in place on Chinese goods.
The UBS analyst Timothy Arcuri said those threats could simply be a "negotiating tactic" ahead of the G20 summit, when Trump is expected to meet with Chinese President Xi Jinping. He also said that "Apple could ultimately mitigate any tariff impacts" if Trump goes ahead with the plan.
"It is unclear whether the incremental tariffs would be at 10% or 25%, but assuming a 10% rate, we estimate an earnings per share impact of ~$0.33 (~2.5%) on our baseline F2019E EPS of $13.06 assuming implementation in March quarter and assuming Apple would absorb the incremental costs rather than passing them on to consumers."
Arcuri has a price target of $225 - 30% above where shares are trading.
RBC analysts are also bullish on Apple, saying at least some of the negative news surrounding waning iPhone has already been priced into the stock - which is down more than 20% from its October peak.
Earlier this month, the smartphone giant reported underwhelming iPhone sales and said that its holiday quarter would be on the low end of expectations. And two weeks ago, a handful of iPhone suppliers - including Apple's main Face ID technology provider Lumentum and iPhone radio-frequency chip supplier Qorvo - cut their respective outlooks, citing a drop in demand from one of their biggest customers. Apple wasn't specifically named.
With investors speculating that all these signs point to weakness in new iPhone sales, the Wall Street Journal reported last week that Apple, in October, cut its production plan for its cheaper iPhone XR model by up to a third.
"Some of the negative datapoints are embedded into Apple's December-quarter guide," RBC analyst Amit Daryanani said in a note sent out to clients on Tuesday. "We haven't gone through a single iPhone cycle where there hasn't been 'noise' around supply-chain cuts."
Daryanani cut his price target to $235 from $240, but maintained an "outperform" rating.