Apple shares were little changed at $171.48 in Friday’s premarket, after falling 4.1% amid a lawsuit filed by the Justice Department against the iPhone maker. Stock will be cut on Thursday.
Wall Street analysts were weighing how big a threat this legal action could pose to the company.
Wedbush maintains an Outperform rating on Apple stock and a $250 price target. “Ultimately, no changes to the business model are expected at this time,” analysts led by Dan Ives wrote.
This is “effectively a kitchen sink lawsuit being built against Apple that has dragged on for years and will eventually reach some form of settlement within the next 12 to 18 months.” “We expect this to be achieved,” they added.
Antitrust claims typically take a long time to proceed in court and often result in fines and mandatory changes, but they are not fatal to a company.
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“We expect most investors to downplay the possibility of a material change to the company’s financial outlook,” JPMorgan analysts said.
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“Certainly it will be a distraction and weigh on the stock price before the process is complete.”
Evercore analysts maintained an Outperform rating and a $220 price target. they write: “The first round of litigation is up to the judges, but it will be difficult for the Justice Department to make it all the way through the court system, as its current relationship with the Supreme Court makes the courts more business-friendly as they move up.”Most favorable To be.
“The initial case will take two to three years to complete, and then the appeal process will take about a year.”
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Atif Malik’s company made a similar statement, keeping its price target for Apple stock at $220. “However, we recognize that the list of ongoing litigation is likely to remain a headwind in the short term,” they wrote in a note.
But the lawsuit is wide-ranging and makes new claims after previous legal efforts fell short. For example, Epic Games, the maker of Fortnite, largely lost a lawsuit against Apple over App Store royalties. Attorney General Merrick Garland has focused on what he calls “exclusionary practices” among multiple Apple products.
“The Department of Justice is not taking prisoners,” said Nick Rodelli, CFRA’s director of legal edge research. “This looks like a bare-knuckle fight over a complaint.”
Email Brian Swint at brian.swint@barrons.com.
