Leading analyst Craig Moffett suggests that plans to move the iPhone assembly to India are unrealistic.
Moffett has been ranked multiple times as a top analyst by institutional investors, and sent a note to clients on Friday after the Financial Times reported that Apple is aiming to move from China to India by the end of next year.
He questioned how to lower tariff-related costs as iPhone components are still being made in China.
“There’s an incredible menu of issues created by tariffs, and travelling to India doesn’t solve all the issues. Now it helps to some extent,” Moffettnathanson’s partner and senior managing director told CNBC’s “Fast Money” on Friday. “I’m sure I’m wondering how it works.”
Moffett argues that diversifying into India is not that easy. They told clients that Apple’s supply chain is fixed in China and that it is likely to face resistance.
“The bottom row is a global trade war, which affects costs and sales, and the move to gatherings to India may help the former (and we stress), the latter may ultimately become a major issue,” he wrote to his client.
Moffett reduced its Apple Price target from $184 per share to $141 on Monday. That means a 33% drop from the end of Friday. According to Factset, the price target is also street-reduced.
“I don’t think I’m the biggest Apple Bear,” he said. “I think I value Apple very much. My concern about Apple was more than the company.”
Moffett has been rated “selling” at Apple since January 7th. Since then, the company’s shares have fallen by about 14%.
“This is because Apple is a bad company. They still have a great balance sheet. [and] “He said it is a great consumer franchise.
Moffett says Apple has not gotten help from the airline to ease the tariff hit.
“You also have demand disruptions created by potentially high prices. Remember that you’ve come out all week. [on] The mobile phone says, “Consumers will have to pay for it. So you will have demand disruptions that will appear due to even longer retention periods and slower upgrade rates. All of these will likely trim next year’s consensus.
According to Moffett, China’s rebound against Apple over US tariffs will also undermine iPhone sales.
“That’s a very real issue,” Moffett said. “The volume really goes to the Chinese Vibos and local competitors, not the apples.”
Apple Stock has been away from a week of victory, up over 6%. This is scheduled for Thursday next year after the market closed ahead of the iPhone maker’s quarterly revenue report.
To get a more personalized investment strategy, take part in the next “Fast Money” live event on Times Square on Thursday, June 5th at Nasdaq.
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