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HSBC Cuts Target on Apple, Warns of Dire Consequences of Tariffs


May. 20 2019, Updated 9:11 a.m. ET

HSBC cuts target on Apple

Today, HSBC (HSBC) cut its price target on Apple (AAPL) to $174 from $180, according to Thomson Reuters. Analysts at the multinational bank cited risks from the slowing Chinese economy and trade tariffs as some of the key reasons that could hurt Apple’s business outlook going forward. Let’s take a closer look.

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The negative impact of the US-China trade war on Apple

Analysts at HSBC believe that if US tariffs imposed on Chinese imports include Apple products, Apple might have to increase product prices in the US. These increased product prices could have dire consequences on product demand.

It’s important to note that in the quarter ended December 2018 and March 2019, Apple product segment sales fell 7.2% and 9.2% YoY. In these two quarters combined, iPhone sales slipped by 15.8% YoY. Experts believe the lengthening life cycle of iPhones and Apple products being too expensive are two of the main reasons hurting the company’s product segment sales.

Apple stock set to fall

Today at 8:26 AM EST, Apple stock was trading at $184.08, down 2.6% in the pre-market session from last week’s closing. Last week, the stock fell by 4.1%. Apart from HSBC’s target price cut on Apple stock, media reports claiming that the US-China trade talks have derailed are keeping Apple investors worried today.

Ridesharing companies Uber (UBER) and Lyft (LYFT) were down 1.8% and 2.7%, respectively, in the premarket session today. Semiconductor companies Micron (MU), Qualcomm (QCOM), and Intel (INTC) were trading with 3.8%, 4.4%, and 2.6% losses for the day, respectively.


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