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Apple Seen Boosting Share Buybacks After Blockbuster Results

  • Reuters

FILE - A customer holds an iPhone 6 on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York, Sept. 19, 2014.

FILE - A customer holds an iPhone 6 on display at the Fifth Avenue Apple store on the first day of sales in Manhattan, New York, Sept. 19, 2014.

Apple Inc's blockbuster results and a ballooning cash pile may prompt the company to boost share buybacks and dividends this year, with some analysts expecting the iPhone maker to return more than $200 billion to investors.

Apple's shares rose as much as 8 percent to $118 in early trading on Wednesday, after the company posted the biggest-ever quarterly profit by a public corporation.

Apple sold a record 74.5 million iPhones in the quarter and reported a 70 percent surge in China sales.

“We had to increase our cell widths and chart heights after Apple's blow-out December-quarter print,” RBC Capital Markets analysts wrote, raising their price target to $130 from $123.

At least 17 brokerages raised price targets on the stock.

Cantor Fitzgerald was the most bullish with a price target of $160 - implying a market valuation of more than $900 billion by the end of the year.

Up to Tuesday's close, the stock had risen 39 percent in the past 12 months, adding more than $177 billion to the company's market capitalization, or nearly half the market value of Exxon Mobil Corp, the second-largest listed U.S. company.

With a cash pile of $178 billion, Apple may increase its capital return program to more than $200 billion over three years, RBC Capital Markets analysts said.

Apple said last April it would return more than $130 billion to shareholders by the end of 2015. The company is due to update its capital return program in April.

Analysts expect Apple to continue to benefit from growth in China and a surge in new customers, including those making the switch to Apple from smartphones using Google Inc's Android software.

“We believe that our thesis on Apple is playing out, that Apple's ecosystem will drive share gain over original equipment manufacturers focusing on specs,” Oppenheimer & Co analysts wrote in a note titled “A Juggernaut Named Apple.”

Apple said it would release its next product, the Apple Watch, in April.

“We believe that Apple is on the cusp of multiple new product launches that are likely to reinvigorate earnings growth relative to Street expectations,” analysts at J.P. Morgan wrote.

Apple's shares were up 7.7 percent at $117.50 in early trading on the Nasdaq. Based on projected earnings growth, the stock should trade at $132.80, according to StarMine's Intrinsic Value model.

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