Daryanani: Apple Will Hike Dividend, Up Buyback By $50 Billion In April

Loading...
Loading...

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.

Loading...
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorLong IdeasReiterationTop StoriesAnalyst RatingsTrading IdeasAmit DaryananiRBC Capital Markets
We simplify the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...