Citi Research reports that the U.S. recently excluded 20 product categories, including smartphones, computers, and semiconductor equipment, from "reciprocal tariffs." This move nearly covers all of Apple Inc.'s (AAPL, Financial) products, potentially boosting its stock price. Previously, it was estimated that increased tariffs could reduce Apple's gross margin by about 9%. The exemption alleviates this negative impact, although the company still faces challenges from a weak macroeconomic environment.
Citi forecasts global GDP to contract by approximately 70 basis points by 2025, which has led to a downward revision of shipment forecasts for iPhones, Macs, and Apple wearables. The iPhone shipment projections for this and next year have been adjusted to 226 million and 234 million units, respectively. Additionally, earnings per share forecasts for fiscal years 2025 to 2027 have been reduced by 2%, 7%, and 5%. Consequently, the target price for Apple stock was lowered from $275 to $245, but the "buy" rating is maintained.
