Apple stock and shares of other tech hardware companies plunged Thursday in response to stiff tariffs imposed late Wednesday by President Donald Trump.
Investment bank Morgan Stanley called the tariffs "calamitous" to information technology hardware makers, given that nearly all such products sold into the U.S. are now subject to 25% to 54% import tariffs, including Apple iPhones.
On the stock market today, Apple stock skidded 9.3% to close at 203.19.
Personal computer makers Dell Technologies and HP saw their shares tumble 19% and 14.7%, respectively. PC peripherals maker Logitech slid 16.7%.
Consumer electronics firms also felt the pain. Kitchen and household appliance maker SharkNinja plummeted 21.4%. Outdoor recreation and navigation device maker Garmin retreated 15%. Audio gear firm Sonos sank 17.4%.
BofA Securities cut its price target on Apple stock to 250 from 265 but kept its buy rating.
With Trump tariffs set at 54% on China, 26% on India and 46% on Vietnam, all of Apple's products will be subject to tariffs at various rates, BofA said.
Trump Tariffs Offer 'Nowhere To Hide'
"Reciprocal tariffs add to the growing list of concerns we have on our (IT) hardware coverage," Morgan Stanley analyst Erik Woodring said in a client note.
"Policy uncertainty, deteriorating business/consumer sentiment, and worsening macro data have resulted in slowing enterprise hardware spending growth and persistently negative consumer electronics spending intentions since late February," he said. "Yesterday's reciprocal tariff announcements will likely amplify these headwinds."
Computer and consumer electronics makers attempted to "de-risk" their supply chains by moving production out of China starting in 2018 during the first Trump administration. But the new Trump tariffs give them "nowhere to hide," Woodring said. Vietnam, India, Thailand and Malaysia were beneficiaries of that manufacturing shift, but they are facing steep tariffs along with China.
Woodring rates Apple stock and Dell as overweight, or buy. He is equal weight, or hold, on HP and Logitech. And he has underweight, or sell, ratings on Garmin and Sonos.
Apple Stock Gets Price-Target Cut
Apple is likely to respond to the higher costs from tariffs "through a combination of supply chain efficiencies, passing a portion over to consumers, and eating up some of those costs," CFRA Research analyst Angelo Zino said in a report.
Zino kept his buy rating on Apple stock but lowered his price target to 235 from 270.
"We believe Apple will have a tough time passing through more than 5%-10% of the costs to consumers given the macro landscape is softening and any major increase could have a detrimental impact to revenue," Zino said. "We expect Apple to hold off on any major increases on phones until this fall when its iPhone 17 is set to launch, as it is typically how it handles planned price hikes."
Raymond James analyst Srini Pajjuri estimates that hardware sales in the U.S. accounted for about 25% to 28% of Apple's total revenue in fiscal 2024. He believes the Trump tariffs could cut Apple's earnings per share this year by as much as 25%.
To fully offset the tariff increases, Apple would need to raise its hardware prices by 30% in the U.S., Pajjuri said in a client note. Still, he rates Apple stock as outperform with a price target of 250.
Could Apple Get A Reprieve Again?
Wedbush Securities analyst Daniel Ives said the Trump tariffs are "illogical and absurd."
In a client note, Ives predicted they won't last because Trump will realize that they would cause "a self-inflicted Economic Armageddon."
"We have to assume this is the start of a negotiation and these rates will not hold," Ives said. "Stocks will sell off massively but ultimately our view is these numbers would throw the U.S. into a clear recession and cause stagflation almost immediately … if they hold (and they will not for long, in our view)."
Jefferies analyst Edison Lee believes Apple could get a tariff exemption like it did in 2018 during Trump's first term in office.
Apple's Feb. 24 announcement that it would invest $500 billion in the U.S. over the next four years might help it get an exemption, Lee said in a client note. One of the goals of the Trump tariffs is to encourage companies to bring their manufacturing to the U.S.
Lee rates Apple stock as underperform, or sell, with a price target of 202.33.
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