Sacconaghi: Apple's Cash Flow Makes It 'Very, Very Discounted'

Apple Inc. AAPL had the highest number of "Android switchers" ever in its December quarter, Bernstein analyst Toni Sacconaghi told CNBC on Wednesday afternoon. Sacconaghi kept his Outperform rating on the stock with a price target of $135 after the company missed revenue and product shipment expectations on Tuesday night.

According to the analyst, the simple facts that Android users continue to ditch the operating system for iOS and average iPhone prices keep rising indicate "that's not a broken business."

"What we have is an extremely difficult comparison," Sacconaghi said, and investors "need that perspective."

The analyst previously wrote on January 11 that while Apple's P/E is near its historic low that occured in 2013 amid a declining gross margin environment, he doesn't believe a similar scenario will unfold in 2016.

He also talked about Apple's cash level. On a cash basis, Apple is trading at about 6 times its cash flow -- the market's nearly double that. "A flat free cash flow going forward would imply about a $135 share price...if you look at cash flow and the cash balance, it's a very, very discounted stock."

Apple shares are stuck in the $94 to $95 range on Wednesday afternoon.