Citi reduces AAPL target to $200, because 'trade wars are bad for tech stocks'

In a note to investors seen by AppleInsider, Citi advised it does not expect Apple will miss its sales guidance for the next quarter, but it does anticipate the figure to be closer to its forecast of $89 billion in revenue than the higher-end $93 billion.

The problem again seems to be one of seemingly over-anticipated demand for the current generation of iPhones, with newer models like the iPhone XS, and iPhone XR seemingly not keeping up to analyst expectations, and some suppliers warning of reduced revenues from cut orders. Older iPhones are seen to be more of an attractive purchase for some consumers compared to the new releases.

"We have found the legacy iPhones are doing better than expected due to the price reductions, which makes the legacy iPhones more affordable in developing countries," wrote Citi.

The ongoing trade war between the United States and Apple was also touched on in the note, with analysts suggesting that, while the United States has considered applying tariffs to iPhone imports, "we do not expect China to ban or impose additional tariffs on Apple."

"However, we note that should this occur, Apple has material exposure to China," claims Citi. In theory, this exposure represents some 18 percent of Apple's total sales, which could be majorly affected if tariffs are applied by either side.

The trade war is the biggest concern for Citi, prompting it to reduce its price target for Apple from $240 down to $200. "Trade wars are bad for tech stocks," the firm added.

While currently setting the price target at $200, Citi also mused on where the price could end up based on predictions. In a bear case, if Apple's revenue growth slowed down to between 2 percent and 3 percent a year, and suffered from weaker gross margins than forecast, the stock price could fall as low as $125 per share.

"For the stock to move higher, we believe investors will await for consensus estimates to move lower," suggests Citi.

Citi is the latest firm to cut its estimates for Apple's stock price target in the last few weeks, with takes from Morgan Stanley, UBS, Rosenblatt Securities, HSBC, and Guggenheim Securities all hammering the company over reduced hardware unit growth and a belief the high average selling price for iPhones will not be sustainable.