As Apple Inc. (NASDAQ:AAPL) gears up for its shareholders meeting on Feb. 27, David Einhorn is trying to windup shareholders to vote against Proposal 2 on the agenda. Today analysts are weighing in on the lawsuit Einhorn filed against Apple Inc. (NASDAQ:AAPL) on Thursday. Goldman Sachs said on Thursday that the lawsuit was a positive for the stock because it highlights the company’s capabilities to increase capital allocation.
Today we have reports from analysts at five more investment firms: Bank of America Merrill Lynch, RBC Capital Markets, Barclays PLC (LON:BARC) (NYSE:BCS), Credit Suisse Group AG (NYSE:CS) and Baird. All of the analysts see the current battle over capital allocation to be a positive for Apple Inc. (NASDAQ:AAPL) because it reminds investors just how much extra cash the tech giant has lying around. And where there’s cash, there’s the possibility for an even bigger dividend than what the company already has planned.
Baupost's investment process involves "never-ending" gleaning of facts to help support investment ideas Seth Klarman writes in his end-of-year letter to investors. In the letter, a copy of which ValueWalk has been able to review, the value investor describes the Baupost Group's process to identify ideas and answer the most critical questions about its potential Read More
Baird analysts said they see the debate over Apple’s cash allocation policy as a potential near-term catalyst. They note that the majority of Apple’s $137 billion cash stockpile is located outside the U.S., which limits the company’s options a bit, however they believe it’s possible that Apple Inc. (NASDAQ:AAPL) will announce another $30 to $50 billion distribution, or even more if Apple decides to use foreign cash.
Analysts at Baird maintain their Neutral rating and $465 target price on shares of Apple because they continue to believe that Wall Street estimates for Apple’s June quarter “could be too aggressive without a significant refresh or new product.”
Analysts at Credit Suisse Group AG (NYSE:CS) say it’s possible that Apple could accelerate its share buyback, offer a special dividend or issue preferred stock as Einhorn wants it to do. They see “significant room for upside” due to the company’s $45 billion in announced distributions. Credit Suisse analysts have maintained their Outperform rating and $600 per share price point on shares of Apple Inc. (NASDAQ:AAPL).
RBC Capital Markets analysts said if Apple Inc. (NASDAQ:AAPL) does double its dividend to 4 percent plus yield and starts returning its extra cash to shareholders, then the stock could start moving up once again in the near-term. They have maintained their Outperform rating and $600 per share price target on Apple shares.
Analysts at BAML also believe that Apple Inc. (NASDAQ:AAPL) must become more aggressive in its capital deployment in order to buoy the stock. They also see plenty of room to do just that and have maintained their Buy rating and $570 per share price objective on Apple shares.
Barclays analysts also see the debate over capital allocation to be a near-term catalyst for Apple stock and expect the company to begin returning more cash to shareholders. Analysts at Barclays PLC (LON:BARC) (NYSE:BCS) have set their price target at $575 per share and given the stock an Overweight rating.
Shares of Apple Inc. (NASDAQ:AAPL) rose more than 1 percent in early morning trading.