Buybacks prompted by President Trump’s tax reform driving Apple valuation – BMO

“Apple Inc. shares have been enjoying a higher valuation relative to the S&P 500 Index lately and that has everything to do with stock buybacks and little to do with its flagship iPhone,” Donna Fuscaldo reports for Invsetopedia.

“That’s according to BMO Capital, which raised its price target on the stock to $184 from $171,” Fuscaldo reports. “BMO Capital analyst Tim Long said the price target had to be lifted because of the capital returns program at Apple, which he characterized as ‘huge.’ At $184 a share, the analyst is below Apple’s closing price of $191.61 a share on Monday.”

“Thanks to President Donald Trump’s tax bill, companies including Apple received a boost as the corporate tax rate was cut to 21% from 35% and a tax break on bringing cash back in overseas was introduced,” Fuscaldo reports. “Apple said in May it would buy back $100 billion in shares and raise its dividend 16% to $0.73 per share. The company has $267.2 billion in cash as of the end of the March quarter.”

Read more in the full article here.

“Long’s concern is that the next models of iPhone, presumably this fall, won’t do much for the business, or the stock, as the average time mobile consumers take between upgrading their phones continues to stretch out,” Tiernan Ray reports for Barron’s.

We believe that the average iPhone replacement cycle was 3.2 years back at the end of CY2009 (only three models available, including 3G/3GS) before dropping to historical lows (2.2 years) five years later (CY2014) at the onset of the iPhone 6 cycle. Since then, the average replacement cycle has been hovering around the mid-two-year mark. We estimate that this rate is at 2.5 years but are concerned it could lengthen further without a compelling launch in September. Every 0.1-year change in replacement rate leads to 8 million units sold. — BMO Capital analyst Tim Long

MacDailyNews Take: Long is wrong. When the next-gen iPhone lineup hits, every iPhone with a Home button will look as antiquated as they already look and are to iPhone X users. This will prompt many more iPhone upgrades than Long expects. Losing the Home button and moving from staccato to quicksilver iOS will also help iPad sales to a lesser extent (because iPads are seen less in public settings, the impetus to upgrade will be less than iPhone).

Read more in the full article here.

MacDailyNews Take: As for the market value of AAPL, the buybacks make Apple’s march to $1 trillion a moving target.

Apple led company stock buybacks during record Q1 – June 27, 2018
Apple’s buybacks accounted for 6% of AAPL volume last quarter – June 11, 2018
Apple plows U.S. tax cuts into record share buybacks – May 2, 2018
Uh, yeah, about those iPhone X ‘concerns’ from analysts: Never mind – May 1, 2018
Apple beats Street with best Q2 ever – May 1, 2018
Apple’s iPhone X isn’t selling well – or is it? – April 21, 2018
Apple’s iPhone X to be discontinued this year, analyst claims – April 20, 2018
Morgan Stanley: Apple stock may fall on ‘materially’ weaker iPhone sales – April 20, 2018
Apple’s iPhone X made 5 times the profit of 600 Android OEMs combined – April 18, 2018
Apple’s iPhone captured 86% of global handset profits in Q417; iPhone X alone took 35% of global handset profits – April 17, 2018
Bernstein: Ams AG is biggest winner in Apple’s TrueDepth Camera system – April 10, 2018
Apple’s iPhone X is the UK’s most popular smartphone – April 9, 2018
Apple’s iPhone X sales continue to disappoint, some analysts say – March 22, 2018
Ignore the iPhone X naysayers – March 10, 2018
Will the naysayers admit they were wrong about Apple’s iPhone X? – February 5, 2018
Do iPhone X sales spell trouble for Apple? – January 30, 2018
Apple supplier says report of iPhone X production cuts was overstated – January 30, 2018
Another January, another misleading iPhone supply cuts story from Nikkei – January 29, 2018
Apple stock drops after Nikkei report of iPhone X production cut – January 29, 2018
Reports of Apple cutting iPhone X orders make no sense – January 2, 2018
Apple stock tumbles on one poorly-sourced report of low iPhone X demand – December 26, 2017
Apple and suppliers shares drop on report of weak iPhone X demand – December 26, 2017


  1. This pearl of wisdom from the “analyst” who till today had the stock priced at $171, an now courageously “upgrades” it to $184, while Apple stock’s reality this morning was roughly $191.50 and anyone who owned it at that price has made $1.71 per share just today. These analysts are pure clowns. Is there anyone stupid enough to take the advice of the idiot Tim Long of BMO Capital?

    1. As if anyone could predict the future in the current trade war climate. I very much doubt Apple is expecting next year to be bigger than last year. That’s why Apple is buying stock instead of making great new products. Great new products require trade, which is not popular in the swamp overflow (Maralago).

      Will the Orange Dictator Wannabe and confirmed Samsung user slap Apple or its suppliers with a special tariff? Will he decide to make special exemptions for companies that swear oaths of loyalty? Might as well flip a coin, no analyst could possibly be able to offer any certainty. You can’t either. Trumpy can’t until Faux Friend Vlad tells him what to do.

      The pain of the first phase of the Trump trade war hasn’t even kicked in yet. Goldman Sachs guesstimates that Trump’s unilateral trade stupidity could slash as much as 15% off the S&P500 in 2019. But nobody is in a position to know for sure because every day the little dictator wannabe comes out with a new smokescreen. Half of the threats are bluffs, and the presidential mind changes like the wind. If the communists bring big silicone titted russian models to Maralago, then suddenly the least democratic nations of the world are treated as best friends. Open, fair, and honest trading blocks that have clear rules that everyone plays by, those are being attacked by the russian puppet on Twitter, undermining people’s confidence when it is the open democratic nations of the world that created the postwar prosperity that Trump and his adoring fans take for granted. Without a strong Europe, there cannot be a strong USA. Europe is the biggest customer for US goods. The EU, the largest economic bloc in the world, will have no choice but to substitute less reliable nations for trade if the USA can’t be trusted. Apple, too, isn’t making any exciting announcements about new factories popping up in the USA. Interesting.

      AAPL isn’t going to shoot to the moon if the world trade is under attack by an idiot who doesn’t have the slightest knowledge or interest in economics — just likes to bully on his little samsung phone. Cook is just concentrating on hiding the cash hoard until the feckless POTUS is put out to pasture.

      1. 5 s for a super entertaining, insightful, and well-written comment.
        Your anti-Trump ad homs (“Orange Dictator Wannabe”) entertain because they are woven into the narrative, but they are wrong. He’s merely behaving like a dishonest Capitalist/corporatist which is simply a carryover from his pre-president MO.
        Trump and others misapply “swamp” which is a beneficial subsystem of a healthy ecology; They mean cesspool. Good point about the EU “…substitute less reliable nations for trade if the USA can’t be trusted.”

        No, Trump is not Putin’s puppet and you can’t back this up. The Trump/Putin collusion refrain to get Trump elected and to undermine another candidate is unfounded, a Hillary/DNC/FBI farce. The interaction between Trump and Putin is merely diplomacy which I prefer over military confrontation. The Cold War is over while Russia is not the Commie USSR.

        And Cook is not “…hiding his cash hoard;” He’s instead giving it back to Wall St. gamblers with which I strongly disagree.

      2. “I very much doubt Apple is expecting next year to be bigger than last year.”

        With pipeline in charge, I can believe that.

        “That’s why Apple is buying stock instead of making great new products.”

        Waste of money. Making great products and acquisitions is what got Apple to where they are today. That said, I have long lost faith in creative clueless Cook to bring us insanely great products. Look at the problems with the MBP and five year drought of the Mac Pro. But, we shall see.

        “Orange Dictator Wannabe”

        I stopped reading right there. Your disrespect for the president aside, it reflects more on you as a childish sore loser and a juvenile whiner …

      3. Actually if you had any grasp of reality you would know that Apple is certainly expecting higher sales and higher profits next year because that is what it does. And it is not only buying back shares, it is paying increased dividends, its stock is at an all time high and new product are coming. And, a huge part of the success of Apple’s share price and its great sales is the economy growing at double the rate under the Marxist Gayboy Obama. Trump is trying to get China to stop stealing IP and also to allow US products to be sold in China without massive tariffs. Like cars and other products. But idiots like you think we should just let China do whatever it wants with no expectation of fair treatment. You are a fucking imbecile.

  2. Yeah, yeah. Apple has a higher market cap than Switzerland. I don’t like that Cook’s MO is so different from Jobs’. And his buy back initiative is one example. Pipeline can also be called the un-Jobsian-like Stock Manipulator and Wall St Cowtowrer. I am uncomfortable with late delivery and recent mistake-prone tech.

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