Leading analyst Craig Mofet suggested that any plan to transfer the American iPhone assembly to India is unrealistic.
Mofett sent a memorandum to customers on Friday after a top analyst by institutional investor. Apple By the end of next year, the target was to move production from China to India.
He is questioning how one step can bring the costs bound by tariffs because the iPhone components will still be made in China.
Moffettnathanson partner and senior managing director told CNBC’s “fast money” on Friday, “You have a tremendous menu of problems created by tariffs, and all problems have not been solved by going to India. Now, it helps to some extent.” “I will question how it is going to work.”
Mofet says that it is not so easy for India to have diversity – to tell customers that Apple’s supply chain will still anchor in China and possibly face resistance.
He said, “The bottom line is a global trade war, a two-faceted battle that affects cost and sales. For India, moving the assembly (and we can emphasize) can help with the East. Later may eventually be a big issue,” he wrote to customers.
MOFFETT on Monday cut its Apple price target from $ 141 to $ 184 per share. This means a decline of 33% from around Friday. According to the factset, the price target is also low.
“I don’t think of myself as the biggest apple bear,” he said. “I think about Apple is quite high. My concern about Apple has been more evaluated than the company.”
Moffett has rated “SAIL” on Apple from 7 January. Since then, the company shares are about 14%below.
“None of it is because Apple is a bad company. They still have a great balance sheet (and) a great consumer franchise,” he said. “It’s just reality that when you are a product company there is no good answer, and your products are being targeted quite quite a lot, and you are going to a market that is likely to be at least some recession in consumer demand due to the macro economy.”
Moffett Note Apple is also not helping to cushion the tariff shock from its carrier.
“You also have the demand for creation made by potentially high prices. Remember, you had it. AT and T, Verizon And T Mobile This whole week came out and says that we are not going to reduce the additional cost of tariff (on) handset, “he said.” The consumer will have to pay for this. So, you are going to make some demand destruction that are also shown in the duration and slow upgraded rates – all of which probably estimated the trims (these) next year’s consensus. ,
According to Mofet, backlash against Apple in China on US tariff will also damage iPhone sales.
“This is a very real problem,” said Mofet. “Volumes are actually going into local contestants in China instead of Huaweis and Vivos and Apple.”
Apple Stock is coming from a winning week – more than 6%. This market comes ahead of the iPhone manufacturer’s quarterly earning report on next Thursday after the market is closed.
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