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?