Analyst Robert Mulller picks up where Amit Daryanani left off.
Apple is in a strong position thanks to avenues of deeper integration available to the tech giant, according to a bullish note from RBC Capital Markets that initiated coverage on Apple shares with an outperform rating and $295 price target.
RBC is bullish on the iPhone because the product has become “deeply ingrained in everyday life.” While analyst Robert Muller does see an elongating product replacement cycle, RBC still doesn’t foresee a decline in smartphone penetration.
The firm also is bullish on the company’s balance sheet which gives Apple the strength to return “significant cash flow to shareholders.”
“Since 2015, AAPL has repurchased $242BN of common shares, over 3x the amount of the second-place Microsoft and Oracle. At present, AAPL has $100BN of net cash on hand,” Muller said. “With management’s intention to achieve a cash-neutral position, we expect the majority of that amount to return to investors via buybacks.”
When it comes to the company’s $295 price target, the firm admits that its 20x future estimates multiple is high when compared with peers but “we believe the brand strength and margin profile, among other considerations, justify the current valuation. In essence, we believe investors receive a nearly free call option on all future innovation.”
Outperform rating, $295 price target.
I’ve requested the note.