Trump's win: What the Apple analysts are saying

Excerpts from the notes I've seen. More as they come in.

Abhey Lamba, Mizuho: Unexpected Election Results Lead to Greater Uncertainty; Stick to Quality Names. We think companies like Salesforce.com and ServiceNow have significant tailwinds from secular trends in the space and valuations are not expensive, especially on a cash flow basis. We expect these vendors to benefit from the currency movement as well. Among legacy providers, we like Red Hat and Commvault due to attractive valuations and potential benefit from the adoption of cloud, which we expect to continue regardless of macro pressures. Lastly, we remain positive on Apple as the stock remains cheap and it does not reflect true value of its large and loyal customer base. Buy. $130. 

Neil Cybart. Above Avalon: Initial Thoughts on U.S. Election Impact on Apple. The odds of major tax reform have increased. Taking a closer look at candidate Trump's platform, a 15 percent business tax rate has been proposed, down from 35 percent. In addition, there would be a one-time tax holiday where companies can repatriate foreign cash at a 10 percent tax rate. Going forward, foreign income would be taxed at 15 percent... Apple will be able to bring back its $216 billion of offshore cash... More interestingly, if the corporate tax rate is permanently lowered, Apple's tax and capital planning will see changes as Apple won't have this issue of ballooning offshore cash. Apple's cash dilemma would be solved.

Trip Chowdhry, Global Equities: Stocks to own in Trump's presidency: Apple, Intel, Tesla. Investors are going to sell High-PE stocks and buy Low-PE stocks, money will flow into Apple Stock. Apple stock has a very low PE multiple of 7.3x FY2017 EPS estimate of $10.07 (Excluding $37.5 net cash per share) S&P is trading at a much higher PE multiple of 24x - money is going to move from High PE stocks to Low PE Stocks.

Ben Thompson, Stratechery: Tech Under Trump, The Big Picture. In fact, the tech industry treats the typical Trump voter—overtly racist and misogynistic or not—with contempt. Just look at the entire digital advertising industry: its entire premise is based on the assumption that people are too dumb to care about their privacy being violated, which means there is an arbitrage opportunity in selling personal information for more than it costs to provide whatever service or publication is drawing said user. Who cares about doing what is right, if it's legal it's A-OK! You can apply the exact same criticism to the tax avoidance policies that every tech company engages in, including — especially — Apple. It is difficult to imagine a starker example of behavior that is justified by being legally acceptable even as it is morally dubious.

Horace Dediu, Asymco: What does Trump's win mean for Apple? It means nothing. Apple’s performance is a function of its resources, processes and priorities. I don’t see any of these changing with a change in the executive branch of the U.S.

2 Comments

  1. Ken Cheng said:
    Thanks to Neil for his Trump tax proposal figures, I was wondering what %ages Trump had proposed. Didn’t seem important until today. A one-time 10% rate seems actionable, compared to 2004’s 5.25% and higher than both Senate and House proposals from last year. A going-forward rate of 15% for foreign income seems in the ballpark, but the devil is in the details.

    I wonder what Trump is thinking regarding overall tax reform. Looking at the physical size of his own tax returns, he probably supports the existing complexity so he can befuddle the IRS.

    0
    November 9, 2016

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