Apple Set to Rise 7% Over the Next Year, Says Gene Munster
Analyst Gene Munster highlights Apple’s capacity to distribute $60 billion annually to shareholders, signaling strong investor returns ahead.
Apple Inc. (AAPL) boasts a cash reserve robust enough to return $60 billion each year to its investors, according to a leading analyst.
Gene Munster, founder and managing partner at venture capital firm Loup Ventures, shared with CNBC that investors are increasingly focused on Apple’s substantial cash reserves rather than solely on iPhone sales figures. He forecasts that if Apple continues to utilize its excess capital for share buybacks, the stock price could appreciate by 7% within the next 12 months.
"Apple operates as a cash-generating powerhouse, surpassing all other FANG stocks and virtually every company globally," Munster emphasized.
These insights follow Apple’s recent announcement of returning $248.4 billion to shareholders in the previous quarter. In its latest earnings report, released post-market on Tuesday, Apple disclosed a record-breaking $23.5 billion spent on share repurchases during the March quarter—an unprecedented figure for any U.S. company, as reported by Reuters. Additionally, Apple plans to increase its dividend payouts by 16%, up from a 10.5% rise last year, and intends to allocate an extra $100 billion toward future stock buybacks. (Related: Apple’s $100 Billion Stock Repurchase Dominates iPhone News.)
Apple’s strategy to distribute a larger portion of its enormous cash pile, currently estimated at $267.2 billion, to shareholders has helped mitigate the impact of modest quarterly results. The company sold 52.2 million iPhones in the quarter ending March 2018, slightly under Wall Street’s forecast of 52.3 million.
Following the earnings release, Apple’s shares climbed 3.84% in after-hours trading. Munster noted, "In the coming quarters and years, investors will shift their focus away from quarterly iPhone sales and become more attentive to the company’s share repurchase activities."
Apple CEO Tim Cook has yet to announce a timeline for the new share buyback program, which succeeds a $210 billion repurchase initiative launched in 2012 and completed nine months early. However, Munster remains optimistic that the company will accelerate its repurchase pace.
"Apple exceeded its previous repurchase timeline by 25%," he stated. "Given Apple’s methodical approach and historical patterns, it’s reasonable to expect similar or faster progress this time." (See also: Apple Prepares to Deploy Its Entire Cash Hoard.)
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