Tim Long, a Barclays analyst in a note to clients Tuesday, warned Apple (NASDAQ:AAPL) may suffer “incidental damage” from the Department of Justice’s continuous antitrust investigation of Google (GOOG, GOOGL).
Apple is not directly involved in the matter, but Long pointed out that the result might significantly impact its revenue and earnings model. About 15% of Apple’s operating income comes from Google’s payments to them for traffic acquisition expenses, hence they could be at risk.
Long said, “Although the initial implications appear negative for Apple’s revenue and earnings, the company could offset lost revenue by expanding its own advertising stack.” With a $184 price target, he assigns an underweight rating on the stock.
Long also emphasized that the lack of openness about Apple’s use of such payments fuels more doubt. He pointed out that although the action is probably going to be appealed for years before any decision is reached, should major adjustments be imposed, Apple’s financial situation may suffer.
This article first appeared on GuruFocus.