BofA analysts said in a note on Tuesday that Apple's (NASDAQ:AAPL) headline China risks could be increasing as they are more in focus.
The analysts, who maintained a Neutral rating and $208 price target on the stock, said that over the past few months, there have been a series of articles that highlight Apple's exposure to China. They noted risks such as the supplier investigation, government ban, and App Store non-compliance.
In BofA's opinion, the highest risk is the production dependence on China, followed by the risk of a negative China policy response, and finally, domestic demand in China across products and services. The analysts note that the production risk is the hardest to diversify from, while the policy risk is the hardest to handicap.
"CEO Tim Cook has navigated these challenges in an extraordinarily nimble fashion," the analysts wrote. "We see higher risk to the valuation multiple vs. earnings estimates at this point in time."
"In our opinion, recent China headlines have already compressed the earnings multiple 2-3x. Maintain Neutral as positives of new products are offset by the risk of a weaker consumer," they added.