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[SAN FRANCISCO] Apple Inc's blockbuster results and a ballooning cash pile may prompt the company to boost share buybacks and dividends this year, with some analysts expecting the iPhone maker to return more than US$200 billion to investors.
Apple's shares were set to open 8.3 per cent higher on Wednesday, after the company posted the biggest ever quarterly profit reported by a public corporation.
Apple sold a record 74.5 million iPhones in the quarter and reported a 70 per cent surge in China sales. "We had to increase our cell widths and chart heights after Apple's blow-out December-quarter print," RBC Capital Markets analysts wrote, raising their price target to US$130 from US$123.
At least 13 brokerages raised their price targets on the stock.
Cantor Fitzgerald was the most bullish with a price target of US$160 - implying a market valuation of more than US$900 billion by the end of the year.
The stock closed at US$109.14 on Tuesday. It has risen 39 per cent in the past 12 months, adding more than US$177 billion to the company's market capitalization. That's nearly half the market value of Exxon Mobil Corp, the second-largest listed US company.
With a cash pile of US$178 billion, Apple may increase its capital return program to more than US$200 billion over three years, RBC Capital Markets analysts said.
Apple said last April it would return more than US$130 billion to shareholders by the end of 2015. The company is due to update its capital return program in April.
Analysts also expect Apple to continue to benefit from growth in China and a surge in new customers, including those making the switch to Apple from smartphones using Google Inc's Android software.
"We believe that our thesis on Apple is playing out, that Apple's ecosystem will drive share gain over original equipment manufacturers focusing on specs," Oppenheimer & Co analysts wrote in a note titled "A Juggernaut Named Apple".
Apple said it would release its next product, the Apple Watch, in April and reach 40 company stores in greater China by mid-2016.
"We believe that Apple is on the cusp of multiple new product launches that are likely to reinvigorate earnings growth relative to Street expectations," analysts at JP Morgan wrote.
Apple's shares were trading at US$117.40 before the bell. Based on projected earnings growth, the stock should trade at US$132.80, according to StarMine's Intrinsic Value model.