In a note to clients Tuesday, Bernstein analysts said that Apple's (NASDAQ:AAPL) financials are "strikingly similar" to IBM's (NYSE:IBM).
The financial comparisons with IBM two decades ago are not unfounded, according to the analysts, who have a Market Perform rating and a $195 price target on the stock.
"After a third straight quarter of negative YoY revenue growth, some investors have jeered that Apple's financials look like IBM's," the analysts wrote. "Apple between 2015 and 2023 has had strikingly similar pre-tax income and EPS growth as IBM did between 1997 and 2012."
Even so, Bernstein analysts noted that Apple trades at a significantly higher relative multiple than IBM did two decades ago due to its superior organic revenue growth, stronger free cash flow realization, greater investor confidence, and a belief that Apple is expanding customer wallet share.
Discussing the takeaways from the comparison, they said, "Revenue growth matters and strong EPS growth absent revenue growth is unlikely to be afforded a rich multiple" and "customer lock-in can prove ephemeral when platforms change."