The leading analyst Craig Moffett suggests that any plan to transfer the United States iPhone assembly to India is not realistic.
Moffett, classified as a superior analyst several times by the institutional investor, sent a memorandum to customers on Friday after Financial Times reported Apple Its objective was to change production towards India from China at the end of next year.
It is questioning how a movement could reduce the costs related to tariffs because the iPhone components would still be carried out in China.
“It has a tremendous menu of problems created by tariffs, and moving to India does not solve all problems. Now granted, it helps to some extent,” said the managing partner and managing director of Moffettnathanson the “fast money” of CNBC on Friday. “I would question how it will work.”
Moffett argues that it is not so easy to diversify India, to say that the client supply chain would still be anchored in China and would probably face resistance.
“The conclusion is that a global commercial war is a battle of two fronts, which affects costs and sales. The assembly of removals to India could (and we emphasize that it could) help with the first. The latter can be the biggest problem,” he wrote to customers.
Moffett reduced its target Apple price on Monday to $ 141 from $ 184 per share. It implies a 33% drop since the closing of Friday. The target price is also the low street, according to Factset.
“I don’t consider myself the biggest Apple bear,” he said. “I think Apple’s quite a lot. My concern for Apple has been the valuation more than the company.”
Moffett has had a “sale” rating in Apple since January 7. Since then, the company’s shares have dropped approximately 14%.
“None of this is because Apple is a bad company. They still have an excellent balance [and] A great consumption franchise, “he said.” It is only the reality that there are no good answers when you are a product company, and your products will be significantly argued, and addresses a market that probably has at least one deceleration in consumer demand due to the macro economy. “
Moffett points out that Apple is not receiving help from its carriers to cushion the coup of the rates.
“You also have the destruction of the demand created by potentially higher prices. Remember, you had AT&T, Verizon and T. mobile All this week comes out and say that we are not going to subscribe the additional cost of the rate [on] Media, “he added.” The consumer will have to pay for that. Therefore, it will have a destruction of the demand that will appear in even longer periods of possession and more slow update rates, all of which probably cuts the consensus of next year. “
According to Moffett, the reaction against Apple in China on US tariffs will also harm iPhone sales.
“It’s a very real problem,” said Moffett. “The volumes really go to the Huaweis and the living and the local competitors in China instead of Apple.”
Apple’s shares come from a winning week, more than 6%. It is ahead of the quarterly IPHONE manufacturer report that is due next Thursday after the closure of the market.
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