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Apple Shares Surge as Bernstein Analyst Upgrades Rating

Apple's shares experienced a significant rise following the upgrade by Bernstein analyst Toni Sacconaghi. The upgrade to an "outperform" rating was driven by the prospects of increased phone replacement sales and the positive impact of generative AI updates. Sacconaghi believes that concerns about Apple's China business are overstated and that the company is well-positioned for a strong iPhone 16 cycle.

The surge came after a prominent analyst at Bernstein Societe Generale Group upgraded the stock to an "outperform" rating. This upgrade marks the first time that Bernstein's Toni Sacconaghi has given Apple a "buy" equivalent rating since early 2018.


Sacconaghi's decision to upgrade the stock was based on the potential for increased phone replacement sales, aided by generative artificial intelligence updates. He believes that Apple's recent weak iPhone 15 cycle and concerns about its China business being structurally impaired have been overblown. According to Sacconaghi, the weakness in China is more cyclical than structural, and Apple's overall business has exhibited higher volatility in the region.


In his analysis, Sacconaghi also highlighted the positive impact of the replacement cycle tailwinds and incremental generative AI features on Apple's prospects for a strong iPhone 16 cycle. Looking ahead to 2025, he estimates that the company could report $416.9 billion in revenue and $7.40 earnings per share, surpassing consensus expectations.


While expectations for Apple's fiscal second-quarter results, set to be released on Thursday, are low, Sacconaghi pointed out that the stock is entering its seasonally strong trading period. Historically, Apple has outperformed in the three months leading up to its iPhone launches in 15 out of the last 17 years.

Sacconaghi maintained his price target of $195, which is higher than Apple's closing price of $173.50 on Monday. The median price target for the stock, according to LSEG data, is $200.


It is worth noting that Sacconaghi had previously downgraded Apple to a "market perform" rating in February 2018 but had initially given it a "market perform" rating in November 2006 before upgrading it to "outperform" in October 2008.


Despite a 9.9% year-to-date decline, Apple shares had a remarkable 48% increase in 2023, indicating the potential for further growth.

 
  • Apple's shares experienced a significant rise following the upgrade by Bernstein analyst Toni Sacconaghi.

  • The upgrade to an "outperform" rating was driven by the prospects of increased phone replacement sales and the positive impact of generative AI updates.

  • Sacconaghi believes that concerns about Apple's China business are overstated and that the company is well-positioned for a strong iPhone 16 cycle.


Source: REUTERS

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