Bernstein analysts believe institutions being underweight Apple (NASDAQ:AAPL) and the tech giant's buybacks could be uniquely helping the stock.
The analysts, who have a Market Perform rating and $175 price target on AAPL shares, said that Apple has been a consistent repurchaser of its shares for the last decade, and its current buyback pace is ~3% of shares outstanding, compared with ~2.0% for the average top 25 stocks.
Meanwhile, the iPhone maker "has an unusual ownership profile," with active managers owning ~34% of the float, below the average of the top 25 stocks of 44%.
"As a result, as assets move from active ownership to passive, this creates an incremental 'buy bid' on the stock. That said, our analysis suggests that this contributed about $20B in net buying in 2022, which is relatively small vs. AAPL's buyback ($89B) and market cap ($2.9T)," they wrote. "Relative to other large-cap stocks, the combined impact of AAPL's buybacks + migration to passive is above average but not uniquely high."
"Market data also indicates that AAPL's ownership among institutions has increased YTD, suggesting some closing of the historical underweight position, and has likely been the biggest non-fundamental driver of appreciation this year."