• Apple Inc. (NASDAQ: AAPL) shares have dipped 21.35 percent over the past six months, down to a low of $96.45 on January 7.

• Bernstein’s A.M. (Toni) Sacconaghi, Jr has maintained an Outperform rating, with a price target of $135.

• Although Sacconaghi believes that the iPhone business continues to be “fundamentally healthy” and that the stock appears attractive at the current levels, it might make sense to wait till the end of the quarter.

Analyst A.M. Sacconaghi mentioned that the stock had declined almost 20 percent since early December due to investor concerns regarding weak iPhone growth during FY16, following the negative data point’s from the company’s supply chain.

Sacconaghi also stated that Apple’s stock appears “extremely inexpensive” at the current levels, across almost all valuation metrics. The current stock valuation prices in a 6-8 percent decline in free cash flows.

Also, the price to forward earnings is close to its historic trough, seen in 2013, when Apple’s gross margins were declining rapidly, which Sacconaghi believes is unlikely to occur during 2016.

On a relative price to forward earnings basis, the stock is trading close to the trough, which was last seen during a period when Apple’s gross margins were collapsing.

“We believe that historical valuation comparables are relevant, in part because Apple's net cash as a percentage of market capitalization has been relatively stable over the past 5 years,” Sacconaghi said.

However, according to the Bernstein report, the principal risks of buying the stock prior to the quarter are that “(1) iPhone channel inventory increases materially; or (2) that Apple's gross margins disappoint. Either could cause investors to pause "to wait and see" and worry where FY16 estimates might bottom.”

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