It’s one of Wall Street’s most well-known rallying cries. ‘Buy the fear’ is a slogan most investors are familiar with, signaling that it’s time to load up on a stock that has had everyone running in the opposite direction.
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On this matter, you could make the case the bears have been out for Apple (NASDAQ:AAPL) in recent times. Despite the market’s year-to-date gains, AAPL shares have been trending the other way, showing losses of 11% since the start of the year.
So, that famous maxim now applies to the tech giant, says Bernstein’s Toni Sacconaghi, who tells investors to “be like Buffett” and load up while 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 with his $195 price target. There’s potential upside of 12.5% from current levels. (To watch Sacconaghi’s track record, click here)
Amidst a soft iPhone 15 cycle and concerns Apple’s China business is “structurally impaired,” the stock has “de-rated significantly,” says Sacconaghi. However, he is of the mind the “prevailing weakness in China is more cyclical than structural.” Sacconaghi also notes that due its “very feature-sensitive installed base,” historically the company’s China business has been much more volatile than other parts of its empire.
Additionally, while this iPhone cycle has been rather weak, the setup appears favorable where the next model is concerned, with “replacement cycle tailwinds and incremental generative AI features” laying the groundwork for a robust iPhone 16 cycle.
With this in mind, Sacconaghi’s F2025 estimates are above consensus with the analyst calling for revenue of $416.9 billion and adj. EPS of $7.40 vs. the Street at $412.1 billion and $7.13, respectively.
More in the near-term, with the company about to report its fiscal second-quarter (March quarter) results on Thursday, May 2, Sacconaghi notes that expectations are low with ~$80 billion in the revenue guide for FYQ3 (vs. consensus at $83.4 billion) “seemingly the bogey.” Similar to how things panned out in 2023 and 2019, Sacconaghi believes the guide could serve a potential catalyst for the stock, clearing the path ahead.
“AAPL is entering its seasonally strong trading period – the stock has outperformed in the 3 months leading into the iPhone launch in 15 of the last 17 years, and by an average of 1280 bps,” Sacconaghi summed up.
So, that’s Bernstein’s view, what does the rest of the Street have in mind for AAPL? Based on a mix of 18 Buy recommendations, 11 Holds and 2 Sells, the analyst consensus rates the stock a Moderate Buy. The average target stands at $200.37, making room for one-year gains of ~18%. (See Apple stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
