He kicked Apple—three times—while it was down, but now a top Apple analyst has come back into the fold.
From a note to clients issued Tuesday by Bernstein’s Toni Sacconaghi:
We note that Apple repurchased 6% of its shares traded in CY Q1; along with Warren Buffett’s share purchases, the two accounted for over 9% of shares traded in CQ1, putting a strong “buy bid” under the stock, and likely tempering investor skittishness. Looking forward, we believe Apple could repurchase 4% – 8% of its share volume per quarter over the next 4 – 6 quarters; Buffett’s recent rhetoric suggests he could also add to his already large position.
We see two impacts from strong repurchases: (1) a significant boost EPS to FY 18 and FY 19 EPS; (2) potential support for the stock. We note that IBM and Buffett accounted for a large percentage of IBM’s trading volume in 2011 and the stock fared well during the period, but there are few precedents in our coverage universe of sustained repurchases accounting for >5% of trading volumes.
Overall, we are incrementally positive on Apple following earnings.
Maintains Market Perform rating, raises price target to $190 from $170.
From his note: A handy Apple/Buffett stock purchase spreadsheet.
Plus, the history of Sacconaghi’s price targets.
My take: Sacconaghi used to believe in Apple. What happened?
See also:
But your chart shows his target vs the -then current- price? Shouldn’t it show the price from a year later?
The concept of one-year targets is a myth.
If that is not correct, the Pretender of Prognostication (Sacconaghi) should provide correction.
Bold. Very bold
Now that investment firms stocked up on deeply discounted AAPL shares during the panic they provoked, thank you Toni and company, they’ll gladly recommend people buy them at peak prices. Well, maybe not so peak prices but at a significant profit.
In the last couple of weeks, of course, we’ve seen a complete revisit of Apple in light of 1) their incredible cash stash, 2) their incredible free cash flow going forward, 3) the passage of the tax cuts, 4) the Big Reveal of Warren Buffett as part of a tag team supporting Apple’s buybacks, and 5) the facts finally coming out about the wild-fire success of the iPhone X.
Pretty understandable when you break it down, really. And what it indicates is that Mr. Sacconaghi is reactive, albeit less reactive than many other analysts. Ergo, this massive turnabout on his part is a clear indication of the lessons mentioned above finally beginning to sink in to the mass market consciousness.
This is what happens to reactive analysts who don’t know what the heck is really going on.
Did he really? I remember Sacconaghi as being a follower. The release of his targets always seemed to follow others. His reversal just before earnings was he following the negative rumors.
Using YoY share count is far more accurate than the percentage of quarterly volume. The Standard Deviation on quarterly volume is 1.14. Compare that to the Standard Deviation on YoY reduction (0.01).
Sacconaghi’s use of share volume is poorly chosen and does not accurately reflect what is happening with respect to share count reduction.
The percent reduction using volume ranges between 1.70 and 6.0.
The YoY range is 3.19 and 5.23.