Market Overview

Apple Buybacks Have Been A 'Powerful' Leading Indicator

Share:
Apple Buybacks Have Been A 'Powerful' Leading Indicator
Related AAPL
Raymond James Lays Out 3 Reasons To To Stay On Apple's Sidelines... For Now
KeyBanc Turns Bullish On Criteo, Says Q4 Print Confirms Growth Opportunity
Investing in the Big Names: Assessing, Apple, Netflix and Friends (GuruFocus)

On CNBC's Mad Money last week, when Jim Cramer spoke to Apple Inc. (NASDAQ: AAPL) CEO Tim Cook, several investors asked whether Cook’s media appearances presaged stock performance.

Bernstein’s Toni Sacconaghi said that, having analyzed the correlation between CEO Tim Cook's public appearances and Apple's stock price reaction, it seemed more prudent to “follow the company's buyback trends than the CEO's media appearances (and accompanying assurances).” The analyst maintained an Outperform rating for the company, with a price target of $135.

Take Cue From Apple Investing In Itself

“Do what they do, not what they say,” analyst Toni Sacconaghi recommended investors. He said that share buybacks were a superior indicator of Apple's “near-term business health and forward stock price.”

Sacconaghi pointed out that since 2012, whenever Apple bought back shares worth $14B or more during a quarter, the stock had meaningfully outperformed over the next couple of quarters. He added that in most other periods, Apple’s shares had underperformed.

Apple’s share repurchases in the most recent quarter [FYQ2] were at average-to-below-average levels, around $6.7B, despite the stock’s significant underperformance over the last several quarters. The analyst added, “We encourage investors to monitor buybacks going forward, given their history as an effective leading indicator.”

Latest Ratings for AAPL

DateFirmActionFromTo
Feb 2018Raymond JamesReinstatesMarket Perform
Feb 2018Goldman SachsInitiates Coverage OnNeutral
Feb 2018Hilliard LyonsUpgradesLong-Term BuyBuy

View More Analyst Ratings for AAPL
View the Latest Analyst Ratings

Posted-In: Bernstein Toni SacconaghiAnalyst Color Long Ideas Reiteration Analyst Ratings Trading Ideas Best of Benzinga

 

Related Articles (AAPL)

View Comments and Join the Discussion!