4 Reasons Sacconaghi Is Even More Bullish On Apple

Apple Inc.'s AAPL hot performance in 2017 still has legs, at least according to Bernstein's Toni Sacconaghi.

In a research report Tuesday, Sacconaghi maintained an Outperform rating on Apple's stock with a price target boosted to $160 from $140. The analyst highlighted the fact that even his upward revised price target implies an EV/2018 CFC of just 12.0x, which is below most of its peers despite the fact that Apple's cash flow is of "notably higher quality" than nearly every other tech company.

Sacconaghi argued Apple's price target is appropriate given:

• The high likelihood of a low cost tax repatriation on cash held oversees
• Apple's commitment to expand its services business
• Mitigated gross margin concerns
• The upcoming iPhone 8 cycle

Path To $170?

Sacconaghi highlighted the fact that Apple's stock peaked at around $132.50 in May of 2015 and during that time its fiscal 2015 earnings per share was $9.22. By comparison, Apple's earnings per share in fiscal 2018 could be notably larger than it was in 2015 at $11.40 per share (if not more), which would justify a share price of around $170.

Bottom line, the analyst stated that historically, Apple's stock strongly outperforms the broader market in the two to six months ahead of a new iPhone product announcement which is followed by a "muted" performance afterwards. As such, Sacconaghi said investors are being recommended to hold overweight exposure to Apple's stock over the coming months.

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