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stock hit a new all-time high on Monday, driven by investor optimism
that the launch of a new iPhone later this year will spark a sales
“supercycle” and hopes that the company’s $230bn in overseas cash might
soon be put to greater use.
It has taken two years for Apple to
surpass its record closing price of $133 in February 2015, despite
briefly breaking above that level during intraday trading at $134.54 in
April of that year. The shares closed at $133.29 on Monday, valuing the
company at $700bn.
Apple shares have risen by more than 15 per cent so far in 2017 and by
more than 40 per cent in the past year. The iPhone maker overtook
arch-rival Samsung to become the top-selling smartphone maker in the
fourth quarter of 2016, according to several researchers.
valuation has increased by more than 1,000 per cent in a decade. After
the stock’s four-year surge following the release of the
second-generation iPhone in 2008, Apple investors have had a more
turbulent ride under chief executive Tim Cook since 2012, amid recurring
doubts about his ability to maintain the series of innovations and
growth seen under co-founder Steve Jobs.
Now, after briefly losing its crown as the world’s most valuable company
to Silicon Valley rival Alphabet a year ago, investors are turning back
to Apple as a high-yielding, slower-growing bet on the smartphone’s
continuing domination of the technology industry.
earnings at the end of January beat Wall Street’s expectations,
prompting several analysts to raise their estimates for how much higher
the stock could go.
Many on Wall Street are pinning their hopes on a “supercycle” of
consumers upgrading their iPhones when the next model arrives in
September. Goldman Sachs’ price-target rise to $150 on Monday helped
propel the stock to its new high, as it predicted a “significant step-up
in innovation” with the next iPhone.
That smartphone is expected to be a more radical departure from its
predecessors than the past two updates, with a brand new design
featuring an edge-to-edge organic light-emitting diode screen, and
wireless charging, as well as new “augmented reality” features.
month, Apple joined the Wireless Charging Consortium, signalling its
wider commitment to a technology that it first used in its Apple Watch.
Mr Cook told The Independent newspaper in an interview last week that he
sees AR — that allows digital images to be intermingled with the real
world, either through a handset’s camera or a headset — as a “big idea
like the smartphone” that could appeal to “everyone”.
“I think AR is that big, it’s huge,” Mr Cook said.
Goldman analysts said in Monday’s note: “Augmented reality could be the
new killer app to reinvigorate upgrade demand for premium smartphones
and in particular the iPhone.”
Apple reported better than expected earnings last month, Morgan Stanley
also raised its price target to $150, in part because of strength in
Apple’s services business, which could lift overall profit margins in
the coming years. Around the same time, Citi lifted its target to $140,
given stronger-than-expected iPhone sales and pricing for the holiday
“In our view, Apple remains one of the most under-appreciated stocks in
the world,” said Brian White at Drexel Hamilton in a recent note.
Apple’s quarterly regulatory filing revealed that advanced purchase
commitments with suppliers rose 16 per cent year on year, which some
analysts took as a signal of stronger revenue growth ahead.
said it was the largest increase since September 2015, coming after four
quarters of declines, and “somewhat surprising” given expectations of
“flat-to-down” hardware sales for the March quarter.
Further boosting the share price is that many investors are hoping a tax
holiday under the Trump administration would allow the iPhone maker to
repatriate some of its $230bn offshore cash pile.
Those funds could then be used to increase its capital return programme,
which has already pledged to return $250bn to shareholders by March
2018. Of that, more than $200bn has been paid out to date, Apple said
last week, including $15bn in dividends and share buybacks in the last
pays out about 22 per cent of its free cash flow, according to a recent
note by RBC Capital Markets, a figure its analysts say could be
increased to more than 50 per cent, attracting a “host of new
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