RBC Capital analyst Amit Daryanani raised his target price for Apple's stock on Thursday from US$475 to $525 based on the likelihood that new iPhone models will ship in September and that the company may expand its stock buyback program, too. Apple hasn't officially confirmed new iPhones are coming next month, but reliable sources have said that an iPhone-related media event will be held on September 10.
Rumors claim Apple will announce the iPhone 5S and the lower cost iPhone 5C at the September media event. With two new models to choose from Apple could give iPhone sales a boost both in current markets and in areas where the combination media player and smartphone hasn't been introduced yet.
Assuming Apple is planning on expanding its stock buyback program even more, share values could jump as much as US$90, according to Mr. Daryanani, assuming the company doubles its investment to $115 million.
In a note to investors Mr. Daryanani said,
There has been increased talk about Apple possibly doing a larger buyback, given low bond yields and attractive share price. Recent comments by [Carl Icahn] have increased the level of investor discussion on this topic. It will be interesting to see what Apple eventually does as this isn't the first time an activist has asked for a change in capital allocation.
Mr. Icahn caught the attention of investors earlier this week when he revealed that he has a large stake in Apple stock, estimated at more than $1 billion. That, plus his confirmation that he's talking with Apple CEO Tim Cook about expanding the company's stock buyback program, helped boost shares up over the $500 mark again.
Apple hasn't sent out media invitations yet for its all-but-confirmed September 10 event, nor has it talked publicly about expanding its stock buyback program. With both as possibilities, however, Mr. Daryanani thinks Apple's prospects look good.
Apple is currently trading at $496.38, down 2.12 (0.42%).
[Thanks to Marketwatch for the heads up]