Apple (NASDAQ:AAPL) shares rose on Thursday as investment firm Bernstein said the stock could “potentially outperform” over the next few months, citing its past historical pattern.
Analyst Toni Sacconaghi, who has a market perform rating on Apple (AAPL) shares and a $170 price target, noted that the stock has outperformed 14 of the past 15 years in the three months prior to an iPhone launch an average of 14%, compared to the S&P 500. However, over the last 8 years, the outperformance has been “more muted,” with an outperformance of approximately 7%.
With the company likely to announce the iPhone 14 in September, Sacconaghi notes there is “some opportunity for Apple to potentially outperform modestly over the next few months per its historical pattern,” but the analyst added that the risk-reward over the next six months to two years is “neutral to modestly negative.”
Apple (AAPL) shares gained slightly more than 0.5% to $136.40 in premarket trading.
Sacconaghi noted that Apple’s (AAPL) valuation has declined “materially” since the start of the year, going from 30 times earnings to 22 times earnings, just above the average of the past 5 years. He also noted that estimates for its upcoming quarter “do not look unreasonable and investor sentiment is generally cautious.”
However, the analyst also pointed out that the stock is not “inexpensive,” as it is trading above historical levels on a relative basis and above other big tech names with higher growth.
“We worry that growth (and robust ASPs, which help support strong margins) may slow among as consumers are increasingly pressured by inflation and rising rates,” Sacconaghi explained.