Shares were off 0.35% to $269.90 a share in early trading on Monday, but are up 71% for 2019. Investors have recently begun to appreciate Apple's services burgeoning services business, while iPhone 11's are selling well and 5G demand and production both look strong.
But looming is the planned Dec. 15 tariff of 10% on Chinese-made consumer electronics such as smartphones and laptops, which would force Apple to either absorb the cost and take a hit to its gross margins, or raise prices and hurt demand.
In a "make or break week ahead," Wedbush Securities analyst Dan Ives said in a note that "Apple has the most to lose/gain from the December 15 line in the sand." That's because 40% of iPhone sales are in the U.S., making them vulnerable to tariffs, Ives noted.
Ives does believe, however, that if the tariffs do go into effect, an Apple exemption from tariffs "will likely be in the cards," as Trump and Apple CEO Tim Cooke recently met at Apple's Austin, Texas plant to discuss that possibility.
If Apple does face tariffs, Ives estimates that the 10% December 15 tariffs would result in a roughly 4%, or 50 cent, hit to Apple's earnings per share for fiscal 2020, depending on how it chooses to respond. Analysts polled by FactSet are looking for EPS of $12.95 for the year. Should Apple decide to raise prices in response to the tariffs, the demand destruction would be roughly 8% of all iPhones expected to be sold in 2020, Ives told TheStreet in an email.
If a trade deal happens, however, Apple could be part of a group of tech stocks that could see a 5% "relief rally" by year end, Ives said.