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Thread: RBC: Apple Could Potentially Fund a $65B+ Annual Capital Return Program

  1. #1
    What's Jailbreak? Akshay Masand's Avatar
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    Default RBC: Apple Could Potentially Fund a $65B+ Annual Capital Return Program


    The Cupertino California company is set to announce an update to its capital return program in April. The folks over at the investment firm, RBC Capital Markets, believe the company could return roughly $65 billion to investors annually, creating yet another reason for people to buy into the company’s stock. Analyst Amit Daryanani recently issued a research note which states that he has raised his price target on shares of AAPL to $140, up from his previous prediction of $130.

    Daryanani believes that Apple could “comfortably” announce a $65 billion+ capital return program for the fiscal year of 2016. He sees an increase in both dividends and buybacks as a use for the company’s large pile of cash. The company generated $34 billion in cash in its last quarter alone and RBC models that it will end up accruing a total of $66.6 billion in fiscal 2015. This would be in addition to the $179 billion in cash the company had at the end of the December quarter.

    Currently, Daryanani expects that Apple will return 100% of its free cash flow to investors, helping to finance a 50% increase in its quarterly dividend to a 2% yield. The analyst was seemingly encouraged after Tim Cook made recent comments stating that the company is looking to return its excess capital to shareholders. Cook also stated that Apple was not interested in being hoarders with their massive pile of cash.

    For those of you who didn’t know, Apple first announced a $45 billion capital reinvestment program in March of 2012, funding a quarterly dividend and share repurchases. The company increased its plan to $100 billion in April of 2013. Aside from revisiting its capital return program, Apple has a number of other catalysts on the horizon that could help drive the company’s stock price higher. He specifically referred to the launch of the Apple Watch in April as well as the sustained growth seen with Apple Pay.

    As of right now, RBC Capital Markets maintained its “outperform” rating on Apple stock. The company’s projections also include an “upside scenario” where it believes AAPL shares could reach $150 while its “downside scenario” sees shares slide to $100. We’ll have to wait and see which direction Apple does end up going in.

    Source: RBC Capital Markets via AppleInsider

    Twitter: @AkshayMasand

  2. #2
    historical growth does not seem to support the estimated jump in FCf in that graph. Typical investor/journalism embellishment.

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