‘Earnings Could Drop by 28%,’ Says Needham about Apple Stock (AAPL)
Needham analysts said that tech titan Apple (AAPL) could see its full-year earnings per share drop by 28%—or about $2 per share—if it doesn’t get an exemption from President Trump’s new “Liberation Day” tariffs. That would bring Apple’s fiscal 2025 earnings down from an estimated $7.32 to $5.27 per share. The analysts, Laura Martin and Dan Medina, stressed that this isn’t even the worst-case scenario, which could involve China banning Apple products altogether. It is worth noting that in Fiscal Year 2024, China made up 17% of Apple’s total sales.
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Needham’s forecast assumes that Apple sells the same number of devices but absorbs the cost of the tariffs rather than passing them on to customers. Under this model, products made in China and sold in the U.S. would face a 54% tariff, while those made in India would be hit with a 26% tariff. However, these tariff costs wouldn’t affect Apple’s Services segment, which includes things like iCloud and Apple Music.
Interestingly, though, Wall Street still sees a 30% chance that Apple will receive an exemption. The reasons include Apple being granted a similar exemption in 2018, its February pledge to invest $500 billion in the U.S. over four years, and its role as one of the most iconic American brands. As a result, investors will be closely watching Apple’s upcoming earnings report on May 1, where analysts expect the company to post earnings of $1.61 per share on $94.04 billion in revenue.
Is Apple a Buy or Sell Right Now?
Overall, analysts have a Moderate Buy consensus rating on AAPL stock based on 17 Buys, 11 Holds, and five Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average AAPL price target of $248.75 per share implies 28.9% upside potential.
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