BofA Securities analyst Wamsi Mohan has reiterated a Buy rating on Apple Inc (NASDAQ:AAPL) with a price target of $265. The reaffirmation is driven by expectations of a robust iPhone upgrade cycle in fiscals 2025 and 2026. This surge is anticipated to be fueled by the demand for cutting-edge hardware to support Gen AI features, along with projected growth in Services revenue and enhanced margins derived from increased usage of internally developed silicon.
Over the weekend, the U.S. imposed a 10% tariff on imports from China. This development has raised uncertainties, particularly for companies like Apple. In the previous tariff cycle, Apple was granted an exception for the iPhone. However, the situation remains ambiguous as to whether a similar exemption will be offered this time around.
In analyzing the potential earnings impact of tariffs affecting Apple, Mohan has considered scenarios where Apple either maintains its existing pricing in the U.S. or decides to raise prices. However, regardless of the chosen course of action, Mohan believes that the impact on earnings would be limited. There is also speculation that President Trump and the Republican administration may be inclined to resolve ongoing disputes involving Google and Apple favorably and seek reduced regulatory constraints from European counterparts regarding the Digital Markets Act (DMA).
Apple has the capacity to manufacture the majority of its iPhone models in India. With the latest tariffs on imports from China coming into effect, Apple could potentially instruct its manufacturing partners to boost production in India and then export to the U.S. This strategy could also be applied to Apple’s other products manufactured in countries such as Vietnam and Malaysia.
Mohan posits that Apple could potentially source 80% of its products sold in the U.S. from countries other than China. However, if the percentage of devices sourced from China remains at 50%, the projected earnings per share (EPS) impact would be ($0.12) in the event that Apple maintains current prices and ($0.07) if Apple opts to increase prices.
Mohan’s forecast for fiscal 2025 anticipates revenues of $411 billion and earnings per share of $7.30. As of the latest check on Monday, AAPL stock was down by 3.97% to $226.62.
This article was originally published on Benzinga.com and discusses the potential limited impact of tariffs on Apple and the likelihood of the Trump Administration easing pressure from the Department of Justice (DOJ). Benzinga does not offer investment advice.
