Bernstein’s Toni Sacconaghi keeps getting Apple wrong

See here, here, here, here and here. So why does CNBC introduce him as a “top Apple analyst”? I did some research.

The first reference to the accolade I found was a 2013 issue of Institutional Investor that put Sacconaghi on its “All-America Research Team” as the No. 1 analyst in IT Hardware:

Since 2002, Sanford C. Bernstein & Co.’s A.M. (Toni) Sacconaghi has been the sector champ. The Hall of Famer, 48, “stands above all others in his thoughtful analysis” marvels one client.

His reputation as a star tech analyst, however, goes way back. A longer write-up in 2011—when Institutional Investor put him on its list of The Best Analysts of All Time:—mentioned that he’d been their No. 1 information technology specialist for ten years in a row:

No. 35: A.M. Sacconaghi  He joined Bernstein in 1998 after working as a technology consultant at McKinsey & Co. and launched coverage of the IT hardware sector in the fall of 1999. The following year, in June, he made one of the first great contrarian calls of his career when he downgraded Hewlett-­Packard Co. from outperform to market perform and cut his earnings forecast after meeting with executives of the Palo Alto, California–based manufacturer of computers and peripherals. He thought their growth forecasts were too optimistic and believed the shares, then at a split-­adjusted $55.13, were fully valued. The stock price slid nearly 7 percent on the day of Sacconaghi’s downgrade; that’s when “it became clear to me that investors were listening,” he says… In November, HP stunned the Street when it reported that results for that year’s fiscal fourth quarter, which ended in ­October, fell 10 cents per share short of consensus expectations. By then the stock had plummeted 45.7 percent, to $29.96; during the same period the sector declined by 20.6 percent. Investors showed their appreciation by voting Sacconaghi straight in to second place in the Enterprise Hardware sector of the 2001 All-­America Research Team.

He has ranked every year since — twice in 2004, when he was No. 1 in IT Hardware and a ­runner-up in Imaging ­Technology — for a total of 12 appearances to date. This year marks his tenth consecutive first-place finish in IT Hardware. Sacconaghi made another great contrarian call in 2005. At that time IBM Corp. had a reputation for “being opaque, slow growing and a company that did a lot of financial engineering,” he says. Even so, he believed that the Armonk, New York–based technology and computer consulting outfit was “compellingly valued, would show improvement in its services business and had several positive forces that should help results.” He upgraded the stock from market perform to outperform in July of that year, at $72.36, and again the market responded immediately. By the time he moved it back to market perform, in March 2011, the shares had rocketed 117.8 percent, to $157.63, trumping even the sector’s impressive 102.5 percent gain over that period.

Today, according to TipRanks, Sacconaghi covers just three stocks, Apple, Tesla and HP, and he’s down on all three:

apple sacconaghi No 1

Among the 5,777 analysts that TipRanks tracks, he’s No. 281 with a “best rating” more than 10 years old:

apple sacconaghji No 1

My take: Sacconaghi is, by nature, a contrarian. I wonder if he’s trying to recreate the 20-year old downgrade on HP that made him famous. So far, no reply to my request for comment.

See also: Apple 3.0’s Toni Sacconaghi archives

13 Comments

  1. David Emery said:

    The stopped clock is famous for once being correct?

    3
    December 27, 2019
    • Alan Birnbaum said:

      Actually, the aphorism is ” a stopped clock is right twice a day “.

      Similarly ” even a blind squirrel can find an acorn once in a while”

      2
      December 27, 2019
      • David Emery said:

        I have a 24 hour clock 🙂 🙂 And it seems that you don’t have to be right twice a day to get cited.

        0
        December 27, 2019
  2. David Baraff said:

    OK, how about some very short term clock prediction, just for fun?
    I’ve got some options which expire *next* January (i.e. basically in 13 months) that have had a tremendous run up (which made up for an equally disastrous run down, previously).

    I *was* going to bail on them at 290, but now I’m thinking just because of the psychological factors, we’re sure to hit near 300 in maybe just a day or two? But I’m also bracing for the typical downturn that seems to occur just before January options. I want to sell them while they are up *AND* before they lose their still large time premium.

    So, for fun, given that I’m not going to hold them past options January 20 (i.e. about 3 weeks), anybody want to pick a target price for fun to sell them at?

    (And, just for the fun story: I bought options in October 2018 in “buy the dip mode”. I managed to lose 85% on that trade. I took the remaining 15%, shot for the moon, and got nearly 10x back. In all, I am up 50% on my original trade. Here’s the kicker: if I had just bought common shares back in October 18, I’d be up nearly 50% as well, with not nearly as much risk. Options, I wish I could quit you…)

    3
    December 27, 2019
    • Gregg Thurman said:

      I want to sell them while they are up *AND* before they lose their still large time premium.

      Historically during periods of positive growth (7 of the previous 9 years), AAPL has gone up >14% from January earnings to April earnings. Average growth through all 9 years is >9%.

      January earnings to April earnings are the highest growth period of the year.

      5
      December 27, 2019
  3. Gianfranco Pedron said:

    At this point I wouldn’t trust Tony to report day old news correctly.

    5
    December 27, 2019
  4. Mordechai Beizer said:

    Phil, I think you’ve got it right. The guy made his name as a contrarian and he wants to burnish his rep by going after the biggest target of all.

    1
    December 27, 2019
  5. Fred Stein said:

    Toni may see Apple as being like HP and IBM. The superficial similarities blind Toni to what Apple really is, and why it is so undervalued. Unlike most older IT giants*, Apple’s growth comes almost entirely from its internal investments in innovation. Also atypically, Apple’s innovations create breakthroughs such as the Watch, AirPods, and Apple Pay/Card/Cash/+. Soon enough Arcade, TV+, Health, and who knows what will join that list. And going deeper, Apple leads in silicon design. Typically older hardware companies become laggards in silicon design.

    *Add Cisco and Oracle (including the Sun acquisition).

    6
    December 27, 2019
    • David Emery said:

      Fred, where would you put Qualcomm in your characterization? Like Apple (results from internal R&D), like IBM and HP (although IBM, at least, did a lot of R&D – not clear how much of that made it into IBM products), or into a third category?

      0
      December 27, 2019
  6. Aaron Belich said:

    Philip, thank you for pulling this together.

    1
    December 28, 2019

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