HSBC Cuts Apple Price Target, Warns Challenges in China Remain

Apple shares are down over 3%, having closed at $183.09 on Monday, continuing a slide that has seen it lose nearly 10% of its value this month.

The latest tumble comes after HSBC analysts slashed the price estimates of the tech giant’s stocks over concerns that exposure to trade rivalry between U.S and China on increased tariffs could harm its prospects.

Monday also saw a global sell-off in the shares of the iPhone maker, this after Google announced restrictions aimed at its business dealings with Chinese telecom Huawei.

Erwan Rambourg, the HSBC Global Co-Head of Consumer and Retail Research, slashed his price target per share from $180 to $174. He attributed his move to the ongoing China-U.S. trade war as well as growth risks in the Asian country’s economy.

Apple shares have retraced by more than 10% since May 1, on the heels of its earnings report. However, the company has maintained that there is consistent service growth.

The U.S president Donald Trump initially threatened to hike tariffs on all Chinese goods up to 25 percent on May 5. According to the analyst note, the tariff increases on China-made goods to the U.S. would likely impact Apple’s product pricing and in turn its overall earnings. China accounts for about 17% of Apple’s overall sales.

Demand is likely to decrease as consumers have already aired their sentiments over the just launched iPhone, which is reportedly too expensive.

Again, Apple is facing increased competition from the Chinese market, with Rambourg observing that there is likely to be a shift in interest. The Chinese market has increasingly witnessed consumers turn to smartphones with similar features, but which are manufactured by local tech companies like Huawei and Xiaomi.

There’s also the added tension that has come with Washington’s decision to blacklist Huawei. The restrictions have also seen tech company Google suspend its dealings with the Chinese company, although it may have to rethink its strategy following news that the U.S. would lift the ban on Huawei for a period of 90 days.