14 Mar

Apple: Buffett Might Have to Wait as Upgrades Pile Up

WRITTEN BY Mark O'Hara FEATURED IN Active Management: Mutual Funds, Closed-End Funds, Hedge Funds and Tech & Comm Services


Today, Cowen initiated coverage on Apple (AAPL) with an “outperform” rating, and it set a 12-month price target of $220. Cowen analyst Krish Sankar called Apple a blend of “trading stock” and “coupon bond.” Sankar explained, “With the iPhone installed base at 900 million units and oldest devices approaching five years, we believe annual iPhone shipments are running near replacement demand…the stock could be a good buy from a short-term trading standpoint as well.”

Apple: Buffett Might Have to Wait as Upgrades Pile Up

Earlier this week, Apple got an upgrade by Bank of America Merrill Lynch. Apple is trading with double-digit year-to-date gains and has recouped the losses it incurred after lowering its guidance at the beginning of the year.

Berkshire Hathaway

Berkshire Hathaway (BRK-B) is Apple’s second-largest shareholder. Berkshire chairman Warren Buffett has praised Apple products as well as CEO Tim Cook. However, he surprised markets (SPY)(QQQ) by not adding more Apple shares in the fourth quarter even as the stock plunged more than 30%.

Meanwhile, in an interview with CNBC, Buffett said Berkshire Hathaway’s average buying price for Apple “is about $141 or something like that.” In response to a question on whether he would buy Apple “at $160 or something,” Buffett replied in the negative. However, he said, “I’m always interested in lower levels in a number of stocks we own.”

Meanwhile, market sentiment has improved for Apple. Brokerages have also been turning bullish on the stock. Apple has scheduled an event for March 25 that observers see as the unveiling of a video streaming service that could rival Netflix (NFLX).

Buffett might have to wait to add more Apple shares, based on the uptrend in Apple’s stock price. See Analyzing Warren Buffett’s Investments in the 21st Century for more information.

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