Analyst: The G-20 Winner 'Is Clearly Apple'

U.S. President Donald Trump and Chinese President Xi Jinping agreed not to impose additional trade war tariffs on each other at the G-20 summit in Japan over the weekend, and experts say Apple, Inc. AAPL is one of the biggest winners from the trade war truce.

Apple and other U.S. stocks with heavy exposure to China traded higher on Monday morning, suggesting investors has positioned themselves for downtide risk ahead of the G-20.

Back On Track

While Trump and Xi’s meeting was a far cry from the end to the trade war, Trump said negotiations are now “back on track” and Chinese state-run media outlet Xinhua said the U.S. and China have agreed to “restart trade consultations...on the basis of equality and mutual respect.”

Trump also said the U.S. would be easing restrictions it imposed on Chinese telecom giant Huawei, which was blacklisted in May due to national security concerns. Apple investors breathed a sign of relief given some experts speculated China could potentially target Apple in retaliation for the U.S. Huawei ban.

Analysts React

On Monday, analysts weighed in on what the G-20 news means for Apple.

Bank of America analyst Wamsi Mohan said the indefinite postponement of new U.S. tariffs on $300 billion of Chinese goods is great news for Apple. Mohan said the new round of tariffs would have almost certainly impacted almost all of Apple’s products.

“We view this as a positive development which will help Apple keep prices unchanged and will delay an immediate need to shift manufacturing and supply chain out of China,” Mohan wrote in a note.

Wedbush analyst Daniel Ives said Apple has become the poster child for U.S. companies exposed to the trade war, and the tech giant came out of this weekend’s summit smelling like a rose.

“All the mathematical gymnastics and doomsday predictors over the last few months has convinced the Street that at least roughly ~$2.00 of EPS in FY2020/FY2021 would vanish from the Apple story given the increased tariffs/costs on the horizon with the company's flagship iPhone Foxconn facility at the centerpiece of the debate,” Ives wrote.

He said the '"G20 winner is clearly Apple," and the truce has removed the biggest near-term uncertainty from Apple’s outlook. In addition, Apple will likely opt not to shift its production outside of China as long as trade talks remain on track.

Ratings And Targets

Bank of America has a Buy rating and $230 price target for Apple.

Wedbush has an Outperform rating and $235 target.

Apple's stock traded higher by 2.5% to $202.90 per share at time of publication.

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