It’s one of Wall Street’s best-known rallying cries. “Buy fear” is a slogan most investors are familiar with, signaling that it’s time to stock up on a stock that has everyone running in the opposite direction.
On this subject, you could argue that bears have been absent since Apple (NASDAQ:AAPL) lately. Despite the market’s year-to-date gains, AAPL shares have trended in the opposite direction, posting year-to-date losses of 11%.
So that famous maxim now applies to the tech giant, says Bernstein’s Toni Sacconaghi, who tells investors to “do like Buffett” and stock up when others are too afraid to do so.
As such, the analyst has now upgraded his AAPL rating from Market Perform (i.e. Neutral) to Outperform (i.e. Buy), while sticking to his $195 price target . There is a potential upside of 12.5% from current levels. (To see Sacconaghi’s track record, click here)
Amid an iPhone 15 slowdown cycle and concerns that Apple’s business in China was “structurally weakened,” the stock has “devalued significantly,” Sacconaghi says. However, he believes that “China’s current weakness is more cyclical than structural.” Sacconaghi also notes that because of its “very feature-sensitive installed base,” the company’s business in China has historically been much more volatile than other parts of its empire.
Additionally, while this iPhone cycle has been rather weak, the setup looks favorable when it comes to the next model, with “replacement cycle tailwinds and incremental generative AI features” laying the groundwork for a robust iPhone 16 cycle.
With this in mind, Sacconaghi’s estimates for 2025 are above consensus, with the analyst forecasting revenue of $416.9 billion and above. EPS of $7.40 versus the Street’s at $412.1 billion and $7.13, respectively.
Shorter term, with the company set to release its second quarter (March quarter) financial results on Thursday, May 2, Sacconaghi notes that expectations are low with around $80 billion in the earnings guide for the third quarter of FY3 (compared to consensus at the time). 83.4 billion dollars) “apparently the bogeyman”. Similar to how things played out in 2023 and 2019, Sacconaghi believes the guide could serve as a potential catalyst for the title, paving the way forward.
“AAPL is entering its seasonally strong trading period – the stock has outperformed in the 3 months leading up to the iPhone launch in 15 of the last 17 years, and by 1,280 basis points on average,” Sacconaghi summarized .
So that’s Bernstein’s point, what does the rest of the street have in mind for AAPL? Based on a mix of 18 Buy, 11 Hold, and 2 Sell recommendations, analyst consensus rates the stock as a Moderate Buy. The average target stands at $200.37, leaving room for one-year gains of around 18%. (See Apple Stock Forecast)
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Disclaimer: The opinions expressed in this article are solely those of the analyst featured. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
