Citi slashed its Apple price target to $200 a share on Monday, saying "trade wars are bad for tech stocks." The stock fell into the red for 2018 on Friday and is down 25 percent this quarter.
"While we do not expect Apple to miss its sales guidance we do expect consensus to come lower closer to our lowered estimates in the weeks ahead," Citi analysts said in a note to investors. "We do not expect China to ban or impose additional tariffs on Apple."
"However, we note that should this occur Apple has material exposure to China," representing 18 percent of the company's total sales, Citi added.
KeyBanc, in a note published on Sunday, said soft demand for the iPhone XR "suggests Apple is hitting the limits of pricing power for a large portion of its user base."
Apple shares opened trading at $165 a share, down 1.9 percent. But the stock recovered in midday and closed up 0.7 percent.
The stock had deepened premarket losses during when CNBC reported that a court in China has granted Qualcomm an injunction against Apple. While Qualcomm says the court's ruling bans the import and sale of nearly all iPhone models in China, Apple is already disputing the scope of the ban. The tech giant says the court ban only applies to iPhones that run on an older operating system.
Citi lowered its Apple price target to $200 a share from $240 a share.
The firm does not expect Apple to miss its own expectations for December sales but said it sees the company reporting "towards the lower end" of $89 billion sales.
"We have found the legacy iPhones are doing better than expected due to the price reductions which makes the legacy iPhones more affordable in developing countries," Citi said.
Citi posed the question "how low can Apple go?" In the firm's new bear case, Citi sees the stock falling as far as $125 a share if Apple's revenue growth slows to 2 percent to 3 percent a year and gross margins are much weaker than expected.
"In order for the stock to move higher we believe investors will await for consensus estimates to move lower," Citi added.
Citi joins a number of Wall Street firms cutting expectations for Apple's stock: Morgan Stanley (on the weak market in China for iPhones), Goldman Sachs (on the lackluster international reception of the iPhone XR), Guggenheim Partners (on declining iPhone unit sales next year), UBS (on warnings from suppliers and weak overseas sales), HSBC (on over-dependence of a single product) and Rosenblatt Securites (on a lowered iPhone shipment estimates).