Apple’s capital return plan looks to be getting much larger, according to one Wall Street firm.
According to a new report from Business Insider, Citi Research reiterated its buy rating for Apple shares, saying the company will use tax reform proceeds to significantly increase its stock buyback and dividend program.
“We do expect volatility ahead as consensus estimates calibrate to lower March and June quarters given more tempered demand for iPhone X,” analyst Jim Suva wrote in a note to clients Wednesday.
“Looking ahead, we expect investor focus to be on the impact from Apple’s capital returns strategy, which we estimate could be a $100 billion [USD] increase, the 2H18 lineup, and continued strength in Apple’s Services segment,” Suva continues.
The analyst predicts the company on its next earnings call will raise its capital return program to about $400 billion USD from its current $300 billion authorization. Suva said a $100 billion USD increase is double the amount Apple has added in each of the previous two years.
As a result, the analyst said Apple will more than double its annual share buyback, which averaged $32 billion USD a year in the last five years.
“We believe that the shares remain attractively valued relative to the market and can undergo sustainable multiple expansion,” wrote Suva.
Apple is set to report its fiscal second-quarter earnings results on May 1.
