Apple shares poised to surge if trade war ends - Wedbush

Shares in Apple could rise by as much as $25 if talks to end the bitter trade war between the US and China prove successful, Wedbush Securities believes.

President Donald Trump and his Chinese counterpart, President Xi Jinping, met at the G20 summit in Japan at the weekend and agreed to resume talks. Trump also said he would allow American companies to continue selling to controversial tech firm Huawei, and confirmed Washington would not impose tariffs on $300bn-worth of Chinese imports.

Shares in Apple rallied 3% in pre-market trading on Monday following the talks, and in a note, Wedbush analysts Daniel Ives and Strecker Backe said that the iPhone giant – which relies on China for both production and as one of its biggest consumer markets – was the clear winner from the G20 meeting.

“With the positive step in the right direction announced between the two countries to not levy additional tariffs while negotiations continued, in essence this takes away the biggest risk on the Apple story for now, in our opinion.”

They continued: “We believe a resolution to the China tariff situation could add between $20 and $25 per share to Apple’s stock over the coming months, as this would take away the dark cloud currently shadowing the stock.

“While many on the Street still need to see what the third quarter results look like, specifically out of the China region, with many yelling fire in a crowded theatre, we believe this weekend’s developments out of the G20 starts to remove the albatross around [chief executive Tim] Cook’s neck, which remains the China trade war situation.

“Taking a step back, there is still more wood to chop ahead for Apple and Cook around seeing a rebound in iPhone demand globally, and continued strength in its services business which we believe is key to the overall valuation.

“However we are incrementally more positive on the stock following developments from the G20 meeting on the tariff front.”

Wedbush reiterated its ‘outperform’ rating and $235 price target.