HSBC analyst Nicolas Cote-Colisson reiterated a Hold rating and a $160.00 per share price target on Apple (NASDAQ:AAPL) after analyzing the company’s position in the regulatory and macro context.
The analyst took note of the agreement in Europe on Digital Markets Act (DMA) that will likely see Apple qualifying as a “gatekeeper.” This practically means that Apple will have to respect “dos” and “don’ts” which will likely hurt the company’s business model.
“For example, Apple would no longer be able to restrict its users from accessing software applications or software application stores outside of its App Store core platform – a provision the company has been fighting. The new regulation could be enforced from spring 2023,” Cote-Colisson said in a client note.
The analyst calculates that regulatory risks globally could represent a headwind of $29 per share.
“Apple has built and keeps enriching a very efficient and profitable ecosystem, predicated on seamless integration of hardware and services. This may prove efficient from a technology point of view but makes regulators, especially in Europe, worry about the entrenched position a company like Apple may have. Incremental regulation in Europe will only start from spring 2023 but may have significant effects.”
Another mounting headwind for Apple is a higher risk of consumer consumption recession that could hurt demand for Apple devices.
By Senad Karaahmetovic