Apple (AAPL) may deliver a bigger-than-expected stock buyback, thanks to overseas cash brought back into the U.S., which could soothe investor angst over how sales of the iPhone X are doing.
X The Trump tax reform package passed by Congress gives U.S. companies the opportunity to bring back overseas cash at a tax rate of 15.5% vs. the earlier 35% rate.
Apple holds the most overseas cash, roughly $250 billion. UBS analyst Steven Milunovich estimates that Apple could have $25 billion more available for repurchasing its own stock after paying taxes on overseas cash.
"Apple clearly is a beneficiary of overseas cash repatriation," Milunovich said in a report. "Including regular free cash flow, we figure there could be $122 billion available over a two-year period (through 2019) or 14% of the market cap while maintaining a net cash position of $90 billion."
The UBS analyst says a buyback "should limit any potential stock downside."
KeyBanc Capital Markets, meanwhile, downgraded Apple chip supplier Cirrus Logic (CRUS) to sector-weight, citing a disappointing iPhone upgrade cycle.
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Cirrus Logic dipped 0.3% to 53.72 on the stock market today. Apple was down a fraction to 174.35.
There's been speculation over iPhone supply-chain cuts. The iPhone X went on sale Nov. 3 after production delays, following the iPhone 8's release in late September.
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