RBC Capital Markets’ Amit Daryanani maintained an Outperform rating for Apple Inc. AAPL, with a price target of $130. He expressed optimism regarding the company being able to “comfortably” increase its capital allocation program to include share repurchases of $50 billion and hike dividend by 10-15 percent.
Apple has $30 billion remaining in its current share buyback plan. Daryanani believes the company could announce an additional buyback authorization of $40-$50 billion during its April EPS call. This buyback would up Apple’s EPS by about 4 percent in FY16 and beyond. Daryanani added that the expected dividend hike of 10-15 percent implies a yield of 2.3 percent.
Related Link: PayPal Investors Overreacted To Apple Pay News, Says Goldman Sachs
FCF Generation
The analyst expects Apple to be able to generate FCF of $69B in FY16, and sustain +10 percent FCF growth in the out years, in-line with growth in operating income. He estimates 41 percent of FCF to be generated is in the US and the remaining overseas. Apple currently has $216 billion of net-cash on hand.
“In aggregate, given the $65B+ FCF potential AAPL could implicitly commit to returning 100% of annual FCF to shareholders over time (specially given the $200B+ cash on hand),” Daryanani commented.
Shares of Apple traded recently at $105.67, unchanged on the day.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
date | ticker | name | Price Target | Upside/Downside | Recommendation | Firm |
---|
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.