Apple (AAPL) stock rebounded on Friday from a two-day dive as Wall Street analysts called the pullback an overreaction to China government restrictions.
XApple stock dropped as much as 8.5% after news reports Wednesday and Thursday said China has banned central government officials from using iPhones and other foreign-branded phones. Bloomberg reported Thursday that the ban might be extended to state-owned enterprises and other government-backed entities.
China cited national security concerns for the move, but it comes amid heightened trade tensions between the U.S. and China.
Meanwhile, Chinese tech giant Huawei Technologies launched a new 5G smartphone, Mate 60 Pro, to compete with the iPhone.
China Action 'More Bark Than Bite'
"Apple's 2-day -6% stock move suggests the market thinks recent China headlines will evolve into something broader," Morgan Stanley analyst Erik Woodring said in a note to clients. "We believe that's unlikely."
Woodring reiterated his overweight rating on Apple stock with a price target of 215.
On the stock market today, Apple stock rose 0.4% to close at 178.18. Earlier in the session, it was up as much as 1.5%.
"Huawei and Chinese government iPhone curb headlines seem 'more bark than bite,'" Woodring said.
Huawei's new smartphone will be limited by supply constraints and potential further technology trade restrictions, Woodring said. Plus, those Chinese government iPhone curbs aren't really new, with similar initiatives going back as far as 2020, he said.
Meanwhile, Apple is a major contributor to China's economy, employing directly and indirectly millions of Chinese workers through device production and app development.
Apple Stock Maintains Buy Ratings
Elsewhere, CFRA Research analyst Angelo Zino reiterated his buy rating on Apple stock.
"We see low risk of significant revenue loss or a full-blown ban in China from these moves as Apple has a good relationship with the government and is extremely critical to the local supply chain," Zino said in a note to clients.
Apple gets about 19% of its revenue from China.
Evercore ISI analyst Amit Daryanani kept his outperform rating on Apple stock with a price target of 210.
"This is more of a headline issue vs. something that will have a material impact on financial performance given government officials were likely already avoiding Apple products," Daryanani said in a note to clients.
He added, "It has been no secret that some (Chinese Communist) Party and government officials and employees in China have been self-banning Tesla (TSLA) and Apple out of political awareness (a virtue encouraged by Beijing) and fear of using these brands one day harming their careers."
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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