Tim Cook may not always have seen eye to eye with President Donald Trump, but if a Trump policy could help push Apple toward a trillion dollar market cap that would surely help undo some of the bad blood.
This is exactly the scenario presented by analysts at RBC Capital Markets, who claim that Apple would stand to gain in a big way from the Trump administration’s planned U.S. tax changes — particularly tax deduction caps for interest expenses, tax rates on foreign profits, and a lowered repatriation tax.
Late last month, Trump and other top Republicans proposed big tax cuts to various businesses. This would mean reducing the corporate tax rate from 35 percent to 20 percent. While there’s still a lot that is unknown about the proposed policy, and pushing through the reforms is easier said than done, RBC thinks there are several big ways Apple stands to gain.
One is capital expenditure, which RBC thinks Apple would likely be able to expense to the tune of around $8 billion. They also assume a 10 percent tax rate on repatriating the $219 billion which Apple is keeping abroad, and suggest that this could be used for share repurchases. The upshot of all of this is that Apple could expect to add $4 to $4.50 to their 2018 earnings-per-share estimate.
While this is still hypothetical, it’s not the first time this has been suggested by pundits, particularly when it comes to giving Apple a way to bring home its overseas cash pile. According to Citi analysts, a move such as this could help boost Apple’s profits by a whopping 16 percent.
It’s also not the first time a trillion dollar valuation has been mooted for Apple. Drexel Hamilton analyst Brian White has called Apple one of “the most under-appreciated stocks in the world,” and said the company is likely to be worth $1 trillion within the next year. Apple was previously the first company in history to surpass the $700 billion and $800 billion valuation mark.