Seeking Alpha

Apple continues to outperform; RBC hikes PT

  • Apple (AAPL +0.4%) is trading slightly higher on an ugly day for tech. Shares rallied to $500 earlier in the week, thanks in large part to Carl Icahn.
  • RBC's Amit Daryanani has hiked his PT to $525 from $475, and (unlike UBS) is on board with Icahn's call for an even bigger buyback. He thinks raising another $55B in debt for buybacks could boost FY14 EPS by $4, and that increasing leverage to a large-cap norm of 1.8x would allow Apple to repurchase 18% of its float.
  • Earlier: China Mobile chairman optimistic about iPhone deal
Comments (20)
  • Not sure that a bigger buyback will mask declining margins, increased competition, a slowing market for high end smartphones of with the iPhone competes in...
    15 Aug 2013, 02:42 PM Reply Like
  • "Not sure that a bigger buyback will mask declining margins, increased competition, a slowing market for high end smartphones"

     

    Are you for real?

     

    Who cares about smartphones if Apple can radically expand their many other sectors they have ignored. That would easily cover the dip in smartphone sales.
    For example, their Apple TV could grow quickly with all the cable providers now battling with network TV. Can you tell us what NetFlix is at today?

     

    Oh, and I forgot about China Mobile. If that goes through than that is another 700 million customers Apple can sell to smartphones to.

     

    Enjoy your falling Google stock.
    15 Aug 2013, 03:05 PM Reply Like
  • Hold on Yesterdays_news... You are basing your comments off assumptions that Apple will grow it's other products such as Apple TV which as far as I can tell is non-existent in the current market. My statement was clearly based off what is Known today about the company. Which is margins and competition

     

    The china mobile deal isn't done yet and rumors in the past have been started that it was near to being done yet here we are...

     

    Netflix? How is that relevant to this conversation?

     

    I don't own Google never have but it would have made a much better investment decision then when I bought $AAPL a few months ago.

     

    I also love how you start off your argument by saying "Who cares about smartphones..." then proceed to conclude your argument with how many smartphones apple will sell if CM deal is done....

     

    Well played sir
    15 Aug 2013, 03:14 PM Reply Like
  • "slowing market for high end smartphones". What have YOU been smoking? Apple sold THROUGH 31 million phones last quarter, a record. Smartphones took over feature phones last quarter for the first time ever.
    As far as a buy back, when Apple can borrow for less then it pays in dividends, its basically free to buy back shares.
    Carl Ichan said to buy hand over fist until it hits $625 and I agree. Apple can borrow a dollar for 1.5% interest and retire a dollar worth of stock that they have to pay a 3% dividend. Why wouldn't they buy as much as they can?
    15 Aug 2013, 03:29 PM Reply Like
  • I'm pretty sure the last report said High end smartphones globally were slowing ; that the rate of growth was slowing. I could be mis-remembering but I'm fairly certain thats what I read...
    15 Aug 2013, 03:31 PM Reply Like
  • hey rocback, care to break down that 31 million sold? How many of them were higher margin IPhone 5 models?

     

    That's right, a minority.

     

    This is probably a good rally to sell into. ICahn did what Einhorn failed to do, but this rally will fade when people realize Icahn fundamentally changed nothing at AAPL.
    15 Aug 2013, 03:55 PM Reply Like
  • good point chopchop0; diminished returns on each iteration after the iphone 4 if I'm not mistaken?
    15 Aug 2013, 04:00 PM Reply Like
  • wigit- If you bought aapl a few months ago you should be fine so that didn't make sense. And saying a company has "increased competition" is for losers. Look at the tech scene in the 90's and 2000's. So now the sector all of a sudden has competent companies playing in it? .
    15 Aug 2013, 04:09 PM Reply Like
  • It was more then a few months now I suppose closer to 6... I sold when I broke even...

     

    If I had gone with google bought and sold same times Google was the clear winner but that's not really relevent.

     

    If you think saying competition has increased for Apple's main product line is for 'losers' well I'll just be a loser then. How can you look at the 90s and pre iphone 2000's and compare... apple was irrelevant back then as smartphones didn't hardly exist... so I'm not really sure what your point is other then you think people who examine competition are losers.
    15 Aug 2013, 04:13 PM Reply Like
  • Who cares who bought into Apple in 1997, 2009 or 2012 or a couple of months ago.

     

    Today, AAPL is a cautious or even good buy on the base of continuous share buy-backs, record iTunes/Appstore performance, the last three iterations of the iPhone selling well, a not too unlikely deal with China mobile and a mid range iPhone for the many markets where Apple was not properly distributed or not even present. If new products or even new product categories will be introduced in September, I rather see this as the icing on the cake, an added bonus.

     

    Regarding China Mobile, especially their tender to introduce 4G/LTE to get subscribers using higher data quotas, will be a catalyst for Apple http://bit.ly/19x0YLA and http://bit.ly/19x0WmU

     

    I don't care if iCahn has snapped up 0.22% or not; Apple has to perform and likely will on its own accord after a long dry period.
    16 Aug 2013, 02:31 AM Reply Like
  • Wow that guy Amit from RBC is a genius. Let's bet on when he raises his price target to $550. I'm betting it's when the stock hits $545

     

    I'm going to follow him and make all of my buying decisions based on his analysis.
    15 Aug 2013, 03:08 PM Reply Like
  • Anyone who bases their investment decisions on the fleeting whims of analysts please send me your address so I can come to your house and punch you in the nose
    15 Aug 2013, 03:22 PM Reply Like
  • Another Amit genius comment -
    " He thinks raising another $55B in debt for buybacks could boost FY14 EPS by $4"
    ===

     

    Elementary math, my dear Amit.
    Reduce market cap by 10% ($55M buyback)
    EPS goes up by 10% (current EPS = $40)

     

    I bet they pay him a lot of money for those gems, huh ?
    15 Aug 2013, 03:34 PM Reply Like
  • Gary, isn't it as follows: reduce market cap 10% and the same earnings will go up 11.1111%? I personally think Apple built the 5C for China Mobile! It answers their objections and if they don't take it, their competition will have them for breakfast. When analysts realize what Apple has in the 5C we are likely going much higher imho. Inexpensive, but it will still have a solid margin. It brings a whole lot more people into the ecosystem. It gets back to one resolution, so the bigger phone will just add a second resolution for developers. IOW, it is almost certainly a precursor for a bigger phone soon. It will be, like all Apple products, a very nice and reliable device, despite the price. Two new phones, with one directed squarely at China, India, Brazil, the rest of the world, and the other aimed at Apple's loyal and higher income customer base will likely spark a lot of revenue growth.
    15 Aug 2013, 04:19 PM Reply Like
  • Regardless of what one thinks about AAPL's longterm prospects, does anyone on this thread think that AAPL won't see at least $550 off the Icahn/hedgie pump?
    15 Aug 2013, 04:19 PM Reply Like
  • We suggested $AAPL leverage up for the largest share repurchase in stock market history on February 21, 2012 - 18 months ago http://bit.ly/LVJMj9 If anyone can find this same idea in print at an earlier date, please advise...yes, we're thought leaders.
    15 Aug 2013, 04:25 PM Reply Like
  • It is buy AAPL, sell the broader market and short bond. Don't forget to short bond as that's where your hedge is.
    15 Aug 2013, 04:31 PM Reply Like
  • ok Doyle I agree and I'll make all the selling decision too! oh yea!!
    15 Aug 2013, 05:38 PM Reply Like
  • Apple isn't going to increase their buyback until next annual meeting (if then) & no dividend increases until then. They're already buying back a massive amount of stock.

     

    If I was them I'd let the stock drop, so they can buy more cheaper. Icahn isn't doing Apple any favors.
    16 Aug 2013, 12:01 AM Reply Like
  • Obviously that is happening, try calling it before it happens )
    16 Aug 2013, 05:25 AM Reply Like
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