Bernstein sees possibility courts rule against Google, end Apple search deal

Bernstein analyst Toni Sacconaghi believes there is a possibility that courts rule against Google (GOOGL) and force it to terminate its search deal with Apple (AAPL). The firm suspects that investors would view an unfavorable ruling negatively for Apple, and estimates the ISA is worth $18B-$20B in annual payments from Google to Apple, accounting for 14%-16% of Apple’s operating profits. While a ruling would likely be appealed, and could take years to be finalized, Bernstein thinks the economic impact on Apple is unlikely to be onerous. Moreover, introduction of a choice screen could offer Apple the opportunity to potentially launch its own search engine as an option, the firm argues. Bernstein has a Market Perform rating on Apple’s shares with a price target of $195.