Apple (AAPL) Lifts Online IPhone Sales Limit Amid Coronavirus Woes

Apple Inc. Price and Consensus

Apple Inc. price-consensus-chart | Apple Inc. Quote

In the first quarter of 2020, Services (13.8% of sales) revenues grew 16.9% from the year-ago quarter to $12.72 billion.

Recently, Apple received a waiver from the U.S. Trade Representative (USTR), which excluded its smartwatch from tariffs imposed on exports from China, approved in a letter posted to the USTR website dated Mar 20.

The U.S. trade representative has granted Apple’s tariff waiver request for Apple Watch smartwatches, enabling the company to import the finished devices from China without paying a 7.5% duty, per a Bloomberg report.

The iPhone-make claimed that it was not able to find a source outside of China to meet demand for Apple Watch production in 2020.

In first-quarter 2020, Wearables, Home and Accessories sales surged 37% year over year to $10.01 billion and accounted for 10.9% of total sales.

Wearables grew 44% year over year driven by strong demand for AirPods and Apple Watch. Moreover, Apple Watch’s adoption rate grew rapidly. Notably, more than 75% of customers who purchased Apple Watch during the reported quarter were first-time customers.

Notably, Apple Watch was subject to the latest round of tariffs in the U.S.-China trade war, which were cut to 7.5% from 15% in a trade deal signed in February 2020.

In November 2019, the tech giant asked the U.S. government to exclude the Apple Watch, iMac, AirPods, and iPhone components from tariffs on goods imported from China, and the Apple Watch has been exempted.

Additionally, the company applied for tariff waivers on other products including Beats Pill+ wireless speaker, Beats wireless earbuds, iPhone smart battery case, the charging case for AirPods and the PowerBeats, storage components for the Mac Pro, and batteries for the iPhone and MacBook.

Further, per a Bloomberg report, the 5G iPhone expected to release this fall hasn't been impacted by supply chain constraints just yet, since mass production doesn't typically begin until May.

Zack Rank & Stocks to Consider

Apple currently carries a Zacks Rank #3 (Hold).

Microsoft Corporation (NASDAQ:MSFT) , Garmin Ltd. (NASDAQ:GRMN) and Applied Materials, Inc. (NASDAQ:AMAT) are some better-ranked stocks in the broader technology sector. While Microsoft and Garmin sport a Zacks Rank #1 (Strong Buy), Applied Materials carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Intel (NASDAQ:INTC), Applied Materials and Garmin is currently pegged at 7.5%, 9.9% and 7.4%, respectively.

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