While speculation and anticipation for tomorrow’s notebook media event builds up, Apple
Toni Sacconaghi of Sanford Bernstein, who has been rather bearish when it comes to Apple for nearly two years, has upgraded the Cupertino tech firm shares to outperform, effectively a buy rating. “The move comes after the stock had plunged more than 40% in value over the last six weeks as the weakening global economy has fueled concerns about the performance of technology companies in general — and Apple in particular,” MarketWatch explains.
“We believe that the stock is overly discounted, that Apple’s short-term financials are likely to remain relatively healthy despite economic weakness, and that the company’s longer-term growth story remains intact,” Sacconaghi wrote in a note to clients Monday. This comes as comforting news, especially in a time when Apple has recently seen an unfounded 18% sell-off in their stock. After hitting a low of $85 on Friday, Apple shares have bounced back for back to back rallies, on Friday afternoon and Monday morning to bring the stock back to above $100 (currently, the stock is up nearly 7.5% to $104.39).
Since 2006, Sacconaghi has placed a neutral rating on the stock. However in a note to clients, he explained that “investors now seem to be valuing Apple based on an earnings multiple, rather than cash flow, which, in his view, “fundamentally undervalues the company given the huge deferred revenue growth associated with the iPhone.” He continues to explain that “We estimate that even if the global PC market does not grow next year and Apple’s share gains are 25% less than they have averaged over the last year, Apple will still grow PC units by 13%,” he wrote. “We feel confident that Apple will be a share gainer, as the company continues to expand distribution and purchase intention remains high.”
Sacconaghi’s price target for Apple shares has been cut back to $135 from $175.
2 Comments to “Apple (AAPL) Upgraded to Buy, Back to Back Rallies”
WOW!!! Finally. This has been an insanely rough last few weeks. Ever since the sell-off, we’ve been slammed. This shows some good signs here.
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Definitely. I wouldn’t consider Apple shares “back” by any means. But, like you said, it definitely shows signs of confidence in the stock. But, like has been said all along, Apple is simply better positioned than any of their competitors.
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