Bank of America Merrill Lynch reiterates its “buy” rating and $180 price target for Apple, forecast that President Trump’s tax reform plan will benefit the company.
The plan would cut the corporate tax rate from 35% to 20% and lower repatriation tax rates for the accumulated foreign earnings of U.S. companies. Bank of America Merrill Lynch analyst Wamsi Mohan tells clients that “existing deferred tax liability on the balance sheet could allow for substantially all of Apple’s foreign cash to be repatriated” and investors will give that cash a higher multiple.
Mohan estimates the lower corporate taxes to benefit Apple’s earnings per share by $0.77 in fiscal year 2018 and $0.89 in fiscal year 2019. The analyst says Apple has $223B in “unrestricted” cash overseas and could repatriate at a tax rate of 8.75%.