Carl Icahn says Apple is still undervalued, plans to increase his $203 price target
Activist investor Carl Icahn believes shares of Apple should be valued much higher than their current trading price, and on Wednesday said he even plans to revise his own price target for the stock, which he called a "no-brainer" investment.
The billionaire appeared on CNBC on Wednesday, where Icahn said he and his team are pleased with Apple's impressive quarterly results. While Icahn has a reputation for using his considerable wealth to interfere with publicly traded companies, he has been generally complimentary of Apple and its continued success.
"I don't recommend too many stocks, I don't like to do that unless I think it's a no-brainer," Icahn said. "And this one is sort of amazing to me, because you know every decade you get one of these --?maybe two or three."
According to Icahn, investors on Wall Street haven't "understood" Apple for about a year and a half. He issued a note to Apple Chief Executive Tim Cook last October encouraging him to buy back more shares, and at the time said his own models suggest the company should be trading at around $203.
Given this week's blockbuster December quarter results, Icahn said Wednesday that he'll probably have to rethink that $203 price target -- suggesting it could go even higher.
"I guess we're going to have to revise our guidance," Icahn said.
The investor and his team do still believe that Apple should spend more of its cash hoard on its own shares, particularly when he thinks they are significantly undervalued. As of the end of the first quarter of fiscal 2015, Apple had $179 billion in cash.
In the past, Icahn called Apple's cash position an "excessive liquidity," which he believes should spur the company to adopt a "more aggressive pace" in buying back its own shares.
While Icahn has praised Cook and Apple's management team for making blockbuster products, he has taken issue with their financial management.
Still, matters between Icahn and Apple are far less contentious than in late 2013, when Icahn attempted to file a shareholder proxy vote to push Apple to repurchase more of its own shares. Icahn eventually dropped that initiative after Apple bought some $14 billion worth of its own shares in a matter of weeks in early 2014.
As of August 2014, Icahn had some 45 million shares in AAPL stock, making him a considerable investor in the iPhone maker. His position in the company, and stature on Wall Street, earned him a private meeting with Cook in 2013.
The billionaire appeared on CNBC on Wednesday, where Icahn said he and his team are pleased with Apple's impressive quarterly results. While Icahn has a reputation for using his considerable wealth to interfere with publicly traded companies, he has been generally complimentary of Apple and its continued success.
"I don't recommend too many stocks, I don't like to do that unless I think it's a no-brainer," Icahn said. "And this one is sort of amazing to me, because you know every decade you get one of these --?maybe two or three."
According to Icahn, investors on Wall Street haven't "understood" Apple for about a year and a half. He issued a note to Apple Chief Executive Tim Cook last October encouraging him to buy back more shares, and at the time said his own models suggest the company should be trading at around $203.
Given this week's blockbuster December quarter results, Icahn said Wednesday that he'll probably have to rethink that $203 price target -- suggesting it could go even higher.
"I guess we're going to have to revise our guidance," Icahn said.
The investor and his team do still believe that Apple should spend more of its cash hoard on its own shares, particularly when he thinks they are significantly undervalued. As of the end of the first quarter of fiscal 2015, Apple had $179 billion in cash.
In the past, Icahn called Apple's cash position an "excessive liquidity," which he believes should spur the company to adopt a "more aggressive pace" in buying back its own shares.
While Icahn has praised Cook and Apple's management team for making blockbuster products, he has taken issue with their financial management.
Still, matters between Icahn and Apple are far less contentious than in late 2013, when Icahn attempted to file a shareholder proxy vote to push Apple to repurchase more of its own shares. Icahn eventually dropped that initiative after Apple bought some $14 billion worth of its own shares in a matter of weeks in early 2014.
As of August 2014, Icahn had some 45 million shares in AAPL stock, making him a considerable investor in the iPhone maker. His position in the company, and stature on Wall Street, earned him a private meeting with Cook in 2013.
Comments
Investors haven't understood Apple since like 1998.
That being said, Carl, Apple is dumping a ton into share repurchases. The problem is they can't spend money faster than they take it in, no matter how hard they try.
Interesting problem to have though.
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Yep, that's what I want to hear!
I just wrote in the previous thread that I want to see price targets above $200!
And like him or not, I say that Icahn's opinion is worth more than any analyst, because he puts his money where his mouth is. He has billions invested in Apple.
I don't take the opinions of people seriously who don't have any skin in the game.
Ugh. This guy again?
I don't know about Apple being worth $203 but I think I'd like to see Apple sitting at $120 after stellar earnings and breaking all-time corporate profit records. I wasn't too happy to see Apple's P/E ratio suddenly compress overnight after earnings. Apple did great on earnings so I feel the price should be a bit higher than it is. I'm totally baffled about how Apple's fair value is determined, but I was hoping for Apple to get back to $120 at some point this week. However, I'll take whatever share price I can get and simply hope for Apple to increase the dividend a little bit more. At least that's something Apple has control over.
I don't know about Apple being worth $203 but I think I'd like to see Apple sitting at $120 after stellar earnings and breaking all-time corporate profit records. I wasn't too happy to see Apple's P/E ratio suddenly compress overnight after earnings. Apple did great on earnings so I feel the price should be a bit higher than it is. I'm totally baffled about how Apple's fair value is determined, but I was hoping for Apple to get back to $120 at some point this week. However, I'll take whatever share price I can get and simply hope for Apple to increase the dividend a little bit more. At least that's something Apple has control over.
No dividend increase at this time, according to Apple's dividend web page.
http://investor.apple.com/dividends.cfm
Ugh. This guy again?
If you are a shareholder, this guy made you some money.
No dividend increase at this time, according to Apple's dividend web page.
http://investor.apple.com/dividends.cfm
I don't want to see more dividends, I want to see more buybacks.
That's well over the trillion dollar milestone mark.
Sounds good to me.
That's well over the trillion dollar milestone mark.
Yes. Apple has invented new techno-lingusitics: they are now the first "terabuck" company.
I say that Icahn's opinion is worth more than any analyst, because he puts his money where his mouth is. He has billions invested in Apple.
Actually that's the very reason his opinion should be discounted: He has a very heavily-vested interest in pumping the stock. (Don't get me wrong: I'd love to see AAPL at $200. It's just that if we're to listen to anyone, it should be a neutral 3rd party.)
Actually that's the very reason his opinion should be discounted: He has a very heavily-vested interest in pumping the stock. (Don't get me wrong: I'd love to see AAPL at $200. It's just that if we're to listen to anyone, it should be a neutral 3rd party.)
I see what you mean, I guess that it can be interpreted both ways.
Is there any such thing as a neutral third party though?
I wish that all Apple haters would also put their money where their mouths are. I advise all Apple haters to go out and immediately short AAPL. I would respect them more if they did, because 99% of them are full of crap.
This.
And they still don't.
I'm enjoying the dividends and steady expansion.
Why? Please explain.
I don't want to see more dividends, I want to see more buybacks.
Likewise.
Yeah Apple's earning performance delivered by their employees had nothing to do with it yet Icahn reaps the reward and now the credit for it.
This target of course is his public target, the one that he'll sell long before it reaches because he has to convince other investors to buy his stock. Why would anyone buy Icahn's stock off him if it was priced at what he thought it was worth?
Let the facts speak for themself. And the facts that Ichan mentions are rock solid.
Isn't that a biased opinion?
No dividend increase at this time, according to Apple's dividend web page.
http://investor.apple.com/dividends.cfm
The dividend increase will almost certainly come next quarter. Most companies like to increase their dividends yearly. For Apple, that's in May.
There is no such thing as a neutral 3rd party.
If you own the stock you could be considered biased.
If you don't own the stock you obviously don't think its worth owning so you are biased also.
Let the facts speak for themself. And the facts that Ichan mentions are rock solid.
Your second "If..." is a fallacy. In some cases, you don't own the stock because the rules of your employment prevent you from owning any of the equities that you cover. There are such situations out there, and these are trying to create neutral third party analysis. It still fails to achieve this, though, so I still agree with your conclusion.