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Luke Kawa

Wedbush slashes Apple price target, says “tariff economic Armageddon” hurts it more than any tech company

Wedbush analyst Dan Ives cut his price target on Apple by 23%, saying that no US tech company is going to be hit as hard as the iPhone giant by reciprocal tariffs slated to go into effect on Wednesday.

From a note to clients on Sunday:

“The tariff economic Armageddon unleashed by Trump is a complete disaster for Apple given its massive China production exposure. In our view, no US tech company is more negatively impacted by these tariffs than Apple with 90% of iPhones produced and assembled in China. We have seen Apple navigate very uncertain times in the supply chain during Covid... but for the stock it was feasible for investors (and us) at the time to look past March or June 2020 quarters and understand and value what normalized 2021 earnings could look like as normalization would happen. This tariff situation is dramatically different and a very scary prospect as the current tariff slate with China at 54% and Taiwan at 32% would be devastating to Apple, its cost structure, and ultimately consumer demand... it’s not a debate in our view.”

Apple has tumbled nearly 16% from President Trump’s Rose Garden announcement to Friday’s close and nearly 4% premarket, as it has massive operations in Southeast Asia, where reciprocal tariff rates are ultrahigh. Analysts at Morgan Stanley see just a 20% chance that Apple receives an exemption from these levies.

Ives also lowered his earnings and revenue forecasts on Apple for this calendar year as well as 2026.

However, even after that price target cut — and the alarm bells clearly blaring, in Ives’ eyes — the analyst still has an “outperform” rating on the stock, and sees it rallying 32% from Friday’s close.

“We stay bullish for the long-term view on Apple as the Services business and strong FCF support a base case valuation of $250... Our bear case is $160 and bull case (tariffs removed or exempt) is back to $325,” he wrote.

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Helena Cheng

Lululemon’s stretch getting tested: Stock plunges after after outlook is cut

Lululemon shares are down double digits in premarket trading after the company cut its full-year sales and profit outlook, overshadowing a Q1 beat and raising fresh concerns about the brand’s turnaround efforts.

The company now expects fiscal 2026 revenue to be flat to down 1%, compared with its prior forecast for 2% to 4% growth. Guidance for full-year diluted earnings per share was dragged down to a range of $10.95 to $11.15, below the company’s previous guidance of $12.10 to $12.30 and well below Wall Street’s estimate of $13.26.

Key numbers for Q1:

  • EPS of $1.69 vs. the $1.68 expected.

  • Revenue of $2.47 billion vs. the $2.43 billion expected.

The modest top-line beat masked a widening divergence between Lululemon’s geographic markets. While international revenue rose 22% overall with a 30% increase in Mainland China, the bigger problem remains North America, where revenue fell 5%.

Interim co-CEO and CFO Meghan Frank acknowledged during the earnings call that recent product rollouts underperformed. A highly anticipated yoga campaign failed to generate its expected “halo effect” across broader product lines.

Profitability metrics took a major hit, with gross margins contracting by 410 basis points to 54.2% due to mounting tariff costs and promotional markdowns. Operating income consequently fell 37% year over year to $276.9 million.

“We experienced spikes of negative commentary in the media and on social channels with regard to our brand, which had an impact on traffic and overall top-line performance,” Frank said during the earnings call. “And second, not all of our product launches have met our expectations. While we have had several successful launches so far this year, we have seen others as we start Q2 not generate the anticipated guest response.”

Lululemon’s valuation has already been steadily compressing for years. While it was once one of retail’s richly valued stocks, investors have been questioning whether the company can return to the double-digit growth era.

The results also arrive during a leadership transition. Lululemon announced back in April that former Nike executive Heidi O’Neill is set to take over as CEO in September, with investors looking to her to revive growth in North America and restore the brand’s growth.

As Lululemon faces both macroeconomic pressure and brand-specific challenges, its stock has dropped around 40% year to date.

markets
Paige Oamek

US job growth skyrocketed in May, blasting past expectations

The US economy added 172,000 jobs in the month of May, the Bureau of Labor Statistics reported Friday, sending 10-year Treasury yields higher.

The strong May job market surprised economists. Experts had predicted only 85,000 new jobs — just half the reported number. The unemployment rate held steady at 4.3%, as expected.

The job growth story is a hopeful spot for the economy as consumers continue to feel inflationary pressure from the Iran war.

Job gains were buoyed by the leisure and hospitality sector, which added 70,000 jobs, as well as local government, healthcare, and education.

Both the March and April jobs reports were revised upward, making them collectively 93,000 higher than previously reported.

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