Apple Inc. (AAPL, Financial) shares climbed 1% on Monday after Jefferies reaffirmed a 'Hold' recommendation and a $211.84 target price, indicating a bearish outlook despite new signs. The stock, trading near its 52-week high of $239.6, is deemed overvalued according to Jefferies analysts.
Coming on the main news, Two Chinese provinces launched 15% subsidies for smartphone purchases, and Apple products were also included in the promotion. This initiative aligns with China's efforts to ward off a potential increase in tariffs by the U.S. and could help Apple record higher sales in this region in the long run.
However, headwinds persist. The expected iPhone 17 Slim is expected to lack physical SIM card trays, which would prejudice its sales in the Chinese markets. Because of this, experts think it might hurt Apple's shipment in the area in 2025, and they expect it to drop between 2 and 3 million units, leading to apprehensions about its competitiveness.
In addition, external factors have not left Apple and are further testing the company, including geopolitical and operating factors that impose Tariffs on it. Under certain circumstances, this could lead to the gross margin being compressed as much as 6.7%. Previous attempts at diversification have only shifted just 10 percent of iPhone manufacture away from China, leaving Apple enormously dependent on the area.
While the Chinese subsidy program offers a potential tailwind, the iPhone 17's design shift and persistent supply chain vulnerabilities highlight the complexities Apple must navigate. Jefferies' maintained price target underscores limited near-term upside for the stock, which closed at $231.00 on Friday, reflecting a cautious market stance amid evolving conditions.
