Evercore: History says Apple will outperform market post split

From a note to clients by analyst Amit Daryanani that landed on my desktop Thursday:

All You Need to Know: Apple’s stock split has been cited as a catalyst for recent outperformance, so we think it is instructive to review performance prior to and following prior Apple splits. The recent split was the fifth Apple stock split with the other four taking place in 1987, 2000, 2005, and 2014. Notably, AAPL stock has outperformed the S&P500 by ~800bps post stock split – suggesting the momentum here should sustain (ex 2000 timeframe). More notably, in 2014 – when we had the confluence of an iPhone super cycle and stock split (comparable to this time?) the stock actually outperformed the broader markets by >16% vs. S&P500. The 180 days leading up to a stock split has typically seen significant outperformance, but this is unsurprising as high absolute stock prices is usually the motivation for a split. Apple has underperformed the S&P 500 just one time in the 180 days following a stock split.

Net/net: Apple has generally outperformed following previous splits and we think this trend should sustain as fundamentals continue to improve. While the current multiple is a premium relative to history, we think it is justified given: a) consumer staple narrative and b) high probability for double digit growth in FY21.

Maintains Outperform rating and $130 target.

Cue the spreadsheets:

apple evercore post split

My take: Morgan Stanley covered this last week. See Katy Huberty: Apple’s 4:1 stock split won’t be a sell-the-news event

2 Comments

  1. Gregg Thurman said:
    Well, AAPL isn’t outperforming the market today. Anybody got a bar of Irish Spring I can use in the bath I’m going to take today?

    1
    September 3, 2020
  2. Paul Brindze said:
    As I pointed out last week. History is short term downturn, post split, lasting a week to over a month, followed by substantial gain. (History doesn’t always predict the future, etc) This headline is accurate long term, but next week or few weeks can be quite rocky. Long term owners strap in and don’t panic. Option/short term players be extra careful.

    I took some (not that much) to cash at $128.30. Trying to decide when to buy back in with that. Thinking too early now. But who knows?

    0
    September 3, 2020

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