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Apple sees its stocks nosedive after HSBC reduces price target

Apple stocks were trading nearly 3% lower early yesterday morning. This followed HSBC slashing the technology firm’s price target over concerns that the trade war between the U.S. and China could seriously harm the company.

HSBC Global Co-chief of Consumer and Retail Research Erwan Rambourg lowered his price target on Apple stocks from $180 to $174 but kept the current ‘reduce’ rating unchanged.

The drop in Apple’s stock price happened against the background of a worldwide sell-off in technology shares, which in turn followed Google’s suspension of certain business activities with Chinese telecoms firm Huawei during the weekend.

Rambourg’s note to investors suggests that the tariff war between the U.S. and China might either force Apple to raise its prices, which would further reduce demand given that iPhones are already regarded as too expensive, or negatively impact profit margins.



Secondly, Rambourg said there is the possibility that buyers in the Chinese market will increasingly replace Apple products with local brands that offer the same or better functionality, e.g. Xiaomi and Huawei.

The analyst also holds the view that, despite Apple trying its very best to boost its services division to compensate for falling iPhone demand, this cannot take the place of the company’s core iPhone product.

Apple stocks have so far lost 10% of their value since the beginning of May – one day after the firm published its latest results, and highlighted services as consistently showing strong growth.

Rambourg added: “cheering a quarter in which iPhone sales were down 17% at a time when the stock was trading at a three-year high in terms of forward PE (price-to-earnings) valuation we think is very counterintuitive.”

When asked for comment by CNBC, Apple failed to respond immediately.

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Chris

I've been a passionate evangelist for Apple and the Macintosh throughout my working life, my first love was a Quadra 605 working with a small creative agency in the south of Norfolk UK in the mid 1990's, I later progressed to other roles in other Macintosh dominated industries, first as a Senior graphic designer at a small printing company and then a production manager at Guardian Media Group. As the publishing and printing sector wained I moved into Internet Marketing and in 2006 co-founded blurtit.com which grew to become one the top 200 visited sites in the US (according to Quantcast), at its peak receiving over 15 million visits per month. For the last ten years I have worked as an Affiliate and Consultant to many different business and start ups, my key skill set being online marketing, on page monetisation, landing page optimisation and traffic generation, if you would like to hire me or discuss your current project please reach out to me here.

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