“When Apple reports FQ2 results for the period ending March on May 1, the tech giant is set to outline the capital allocation plans after tax repatriation,” Stone Fox Capital writes for Seeking Alpha. “The cash flood could be the catalyst for the stock soaring to $200 and becoming the first stock to top the $1 trillion mark in market cap.”
“Back on April 5, Citi reiterated a $200 price target on the stock due in part to expected massive capital returns,” SFC writes. “The stock has about 16% upside to reach this price target. Such a gain would send Apple’s market cap up toward just shy of $1 trillion depending on the level of stock buybacks. The downside of reducing the share count is a lowered market cap.”
“The CFO [Luca Maestri] suggested on the FQ1 earnings call that the company would move more toward a net cash neutral position over time. What exactly this means is entirely unclear. What’s known is that the current cash balance amounts to 19% of the $860 billion market cap,” SFC writes. “Apple is set to at least double the share buyback plan while making the traditional 10% hike to the dividend. With more than $30 per share in net cash, the stock is extremely cheap, trading at 10x FY20 EPS estimates. This valuation remains supportive of the company ramping up stock buybacks which will further boost forward EPS estimates and make the stock even cheaper. The big cash flood should boost the stock to new heights including reaching $200 and approaching the $1 trillion market cap.”
Read more in the full article here.
MacDailyNews Take: We’ll see if the share count reduction impinges the market cap, but as long as the share price increases, who cares?! A trillion-dollar market value will come eventually. Apple is too big a cash machine for it not to happen.