Bernstein Raises Apple Investment Rating... "Target Price $195"

Investment Rating Upgraded from Market Perform to Outperform
"Additional Stock Price Upside Potential 15%"

Investment firm Bernstein has upgraded its investment rating on Apple stock to 'Outperform' from 'Market Perform.'

On the 29th (local time), Bernstein announced it was raising its rating on Apple from 'Market Perform' to 'Outperform.' The 12-month target price for Apple remains at $195, indicating a potential 15% upside in the stock price.

Bernstein believes Apple's stock has fallen too much due to weak iPhone 15 sales and declining revenue in China. While the S&P 500 index has risen 6.9% this year, Apple's stock has dropped 12%.

Bernstein analyzed that Apple's price-to-earnings ratio (PER) below 25 is a buy signal, and above 30 is a sell signal. According to Bernstein's estimates, Apple's PER is currently trading at 26.4 times based on 2024 earnings and 22.9 times based on 2025 earnings.

Analyst Tony Sakonagi of Bernstein noted in a memo, "Despite Warren Buffett's reputation as a long-term buy-and-hold investor, he has consistently followed the rule of adding to positions when prices are relatively cheap and trimming them when prices are relatively expensive." He added, "Accordingly, we recommend investors buy Apple when its PER is below 25 and sell when it exceeds 30."

Bernstein also expects strong sales for the iPhone 16, driven by the iPhone replacement cycle and the addition of generative artificial intelligence (AI) features. They emphasized that in the three months leading up to an iPhone launch, Apple’s stock has outperformed the market 15 out of 17 times. The iPhone 16 is expected to be released in September.

Analyst Sakonagi said, "Expectations for Apple's fiscal second-quarter earnings are low, and third-quarter revenue forecasts are likely to fall short of market expectations," adding, "Investors should not be afraid."

Meanwhile, following Bernstein's upgrade, Apple shares were trading at approximately $174.51, up about 3% from the previous trading day, as of 10:42 a.m. in the New York stock market. Apple is scheduled to announce its quarterly earnings on the 2nd of next month.