Why Toni Sacconaghi won't upgrade Apple (video)

"The entry point is rich," says Bernstein's senior Apple analyst.

Maintains Market Perform rating and $300 price target.

My take: My ears perked up when Sacconaghi said that if Apple were to become a true services company, it might command a multiple even higher than the one it has today. "How high?" was the follow-up question that didn't get asked.

15 Comments

  1. David Emery said:
    “Past performance is no guarantee of future results.” But with most ANALysts, it’s a pretty good hint. 🙂

    3
    January 30, 2020
  2. Martin Beutling said:
    Poor Toni, his mind is captured by the theory, that only companies with high-percentage-growth-rates are on the road to success….

    I am sure he doesn’t even know how much cash Apple generates in the last 12 months with its actual mediocre growth-rate.

    Why is he still on air?

    4
    January 30, 2020
  3. Jerry Doyle said:
    Toni, who seems a decent individual, is lacking perception that Apple’s hardware is performing similarly to a services business model through consumer repeatability of upgrading every few years in hardware and wearables. Tim Cook on the conference call emphasized that their zero percent financing of the iPhone hardware program (with Apple Care Protection) is growing significantly (I can’t recall the percent, if he gave one) where individuals are upgrading to new hardware annually on monthly subscription plans. Little doubt, Apple will incentivize this move approach to bring in ever more folk into the ecosystem to increase that install base number.

    In summary, Apple is a company with a powerful combination of hardware, software and long-term-upside to Services driving the price target forward with higher multiples. Toni fails to perceive this concept in his mind.

    4
    January 30, 2020
  4. John Blackburn said:
    It is perhaps at some point appropriate, efficacious even, to simply ignore.

    3
    January 30, 2020
    • Gregg Thurman said:
      simply ignore.

      YAY. I’m in.

      3
      January 30, 2020
  5. Fred Stein said:
    Toni misses one key point about valuation, i.e. Apple’s future earnings compared to 10 year t-bills. Apple earns (future) about 2X the t-bill and Apple’s EPS keeps growing. Buybacks de-risk future EPS. That’s a safe investment.

    He also misses that HW is already a subscription business. Nearly everyone replaces their Apple device, from a $15K Mac Pro to $159 AirPods with a new Apple version. The time scales are less predictable. But so what? Indeed, if this flu impacts near term sales, or if 5G takes off slower, Apple gets the sales eventually.

    7
    January 30, 2020
    • Aaron Belich said:
      I had a dog, and his name was

      BINGO!!

      0
      January 30, 2020
  6. Jerry Doyle said:
    Gentlemen, I hear you, I have empathy and deep consistent feelings with your desires to simply ignore Toni Sacconaghi. It cannot be done as long as he is a professional analyst’s voice inside his peers’ community and as long as CNBC trots him out to articulate his views.

    It reminds me of a similar incident during my work career. We had a key executive position in senior management filled by an incompetent individual known throughout the staff to be in-over-his-head (big time), and known throughout the stakeholder community, for whom he had regulatory oversight, as incompetent. It was “his” voice heard and accepted over ours’. It was he who signed authorizations, not us. It was he who controlled the entire budget for our division. It was he who signed off on the talking points. On and on I could enumerate that the buck stopped with him because it was his butt sitting in the decision chair.

    Toni is an Apple decision maker analyst for Bernstein, as long as he holds his position. If one cannot move him out of that position, then one needs to find ways to educate him on how his thinking of Apple’s fundamentals have flaws, especially as long as CNBC whisks him in front of the cameras as an Apple analyst expert on national television to pontificate on his rationale. No disrespect guys, but your tuning him out isn’t tuning Toni Sacconaghi out. He’s still someone to reckon with in the analyst community’s spin on Apple, and all things Apple.

    5
    January 30, 2020
    • David Emery said:
      > “Toni is an Apple decision maker analyst for Bernstein, as long as he holds his position.”

      Is he? The abysmal performance of so many ANALysts raises serious doubt about whether their employers actually pay any attention to their predictions/advice. I can’t imagine a company retaining an advisor who missed so much profit as Toni, or most of the other ANALysts employed by big-name financial firms.

      My suspicion is that these companies and their fund managers have their own internal analysis departments. Thus, the primary purpose for these public analysts is to raise publicity exposure for the firm with external customers and with the public at large. By that measure “#1 Toni” is a big success, regardless of what the results of his advice would be for funds within the company.

      2
      January 30, 2020
      • Jerry Doyle said:
        @David Emery: I do not see disagreement with what you wrote and with what my point is relative to Toni Sacconaghi’s continuing role as Bernstein’s Apple analyst, and as CNBC’s Apple “expert” professional analyst. As Toni continues in his position he “will be covered” by the professional media as a professional Apple analyst. He will have a “voice” to be heard in the scheme of viewing Apple. PED is not going to drop Toni from PED’s analysts’ projected or smackdown spreadsheets. PED also is not going to terminate articles (such as this one above) on Toni Sacconaghi, no matter how many of us simply ignore him. You and I agree that we try to ignore him, even though here we are commenting on him. Kind of an oxymoron, isn’t it?

        Toni is out there front-and-center as an Apple professional analyst and as one viewed by CNBC as a professional Apple analyst “expert” pontificating away to a national television audience. Go figure! We have to deal with that fact.

        To reiterate, Toni is “… still someone to reckon with in the analyst community’s spin on Apple, and all things Apple.”

        2
        January 30, 2020
        • Aaron Belich said:
          Until Social Media, or otherwise, makes enough noise to make him a liability to his current employer and he gets tossed out on his ass ala Rosenblatt’s action with their prior analyst in charge of AAPL coverage and others stocks.

          4
          January 30, 2020
          • Jerry Doyle said:
            @Aaron Belich: “Bullseye!”

            2
            January 30, 2020
  7. Alan Birnbaum said:
    CD ( Coronavirus Drop) today?

    1
    January 30, 2020
    • Gregg Thurman said:
      CD ( Coronavirus Drop) today?

      CDMR (Coronavirus Doesn’t Matter Rally) today?

      FUNDAMENTALS Uber Alles ! ! !

      1
      January 30, 2020

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