Citigroup Analyst Jim Suva joins Yahoo Finance Live to discuss Apple stock, manufacturing disruptions in China, and product innovation.

Video Transcript

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BRIAN CHEUNG: Analysts at Citigroup have lowered estimates on Apple due to macro concerns. But with a price target of $175, the call still sees some upside for the tech stock that's essentially been an MVP over the last month. Joining us now is Citigroup's Managing Director and Apple analyst Jim Suva. Jim, great to have you on the program this Friday morning.

I want you to walk us through your call. Again, you had a $200 price target on the stock, it's $105 now, that is a downgrade, but that still presents some upside from where we're at now. What's behind the thesis?

JIM SUVA: Well, your observation is spot on. What's behind the thesis is some of the macro concerns that we've seen, specifically the COVID issues of the breakout of COVID, for example, in China, where certain locations in China will have a complete zero tolerance policy and have to shut down.

Apple stores in that area have to shut down, Apple manufacturing has to shut down. And it does indeed impact them. And then also investors and everyone in society are getting used to this new interest rate environment as well as inflation. Gasoline, food, clothing, prices are going higher. So we believe that people are simply going to be a little more prudent with some of their spending.

So we still see upside. A lot of reasons to own the stock. And, you know, we lay out some of those reasons. It has been a very good performer in the past month or so as you've noticed. A lot of this has to do with they have a lot of cash flow, a lot of backing of their stock buyback, as well as they're still innovating. That really keeps us excited that the company is still innovating a lot, and a lot of room ahead for them to still grow.

AKIKO FUJITA: Jim, we've heard from a number of chip makers who have sort of flagged the waning demand they're seeing, at least in consumer electronics, especially stemming from inflation. And I wonder how you think about that in the context of Apple's products. I mean, which products do you think get hit the most?