Apple Rallies Early as Bernstein's Sacconaghi Upgrades

Bernstein Research hardware analyst Toni Sacconaghi this morning upgraded his rating on Apple (AAPL) to Outperform from Market Perform, while cutting his price target on the shares to $135 from $175.

“We believe that the stock is overly discounted, that Apple’s short-term financials are likely to remain relatively healthy despite economic weakness and that the company’s longer-term growth story remains intact,” he wrote in a note this morning. “While short-term uncertainty persists, we believe that the stock’s overall risk-reward is compelling at current levels.”

Sacconaghi goes on to assert that Apple’s stock now appears “overly discounted.” He contends investors appear to be valuing the company on a P/E multiple, rather tan on cash flow, “which fundamentally undervalues the company given the huge deferred revenue growth associated with the iPhone.”

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