Despite the gloom and doom talk surrounding the U.S.-China trade war, Apple shares remain mostly unaffected, rising steadily to gain 66.5% so far in 2019.
Now analysts at Morgan Stanley are claiming the stock is under-owned and projects an additional 10% upside for the stock as it sets a price target of $296 a share.
At the Morgan Stanley APAC summit this past Monday, Morgan Stanley analyst Katy Huberty told CNBC that even the 100 largest Apple investors are underweight the stock, holding positions that are smaller than the S&P 500 weighting.
Based on that, and a belief that iPhone sales are recovering, the analyst sees at least 10% upside for Apple shares. Also adding to the bullishness is the company’s stock buyback plan, and the growth in the services side of Apple’s business.
Regarding the impact of the U.S.-China trade war, Huberty pointed to the fact that since the trade war began and increased tariffs were put in place, Apple’s margins have been flat to rising. That indicates little to no impact from the trade war. She expanded further on the subject, saying Apple has almost certainly shifted production from China to other areas of the world in case tensions between Washington and Beijing escalate.
Apple CEO Tim Cook has a good relationship with leaders in Beijing, and with President Trump and his family, and this has allowed Apple to avoid tariffs on both sides of the trade war. But can these relationships continue to keep Apple out of the firing line of tariffs, or will they eventually be targeted too?