Baird Continues to Bet on Power of Apple's (AAPL) Platform; Sees $100B Buyback, Not Major M&A

Baird analyst William Power is expecting Apple (NASDAQ: AAPL) to report solid Q1 results in-spite of possible risks to Q2 forecasts in light of iPhone X promotions and remains positive on the continuation of platform strengths, a plethora of growth opportunities and tax reform benefits. The analyst believes another iPhone cycle is likely in the fall and would be an aggressive buyer on any dips in the equity.

As for repatriated cash, Power sees Apple using the money to "super-size" the current buyback plan while increasing the dividend modestly. He suspects another $100 billion in buybacks could drive next year EPS levels up by nearly 10%

Further, Power is not expecting a major M&A transaction "just because it has more cash on-shore" and notes a Netflix (NASDAQ: NFLX) acquisition doesn't move the financial needle. The analyst also believes an entrance into autos via Tesla (NASDAQ: TSLA) seems unlikely.

Baird maintains an Outperform rating and price target of $190.00.

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