“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.
SEE ALSO:
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