Apple (AAPL)’s “mind-blowing” level of free cash flow can push shares of the tech giant to $150, Barclays’ Ben Reitzes told CNBC on Tuesday.
In the December quarter, free cash flow figure of $30.5 billion, or $5.19 a share, beat Wall Street’s estimates by about 40%, he said, arguing that even after using Barclays “conservative” FY’15 forecasts for free cash flow [FCF] of $63 billion, or about $11 a share, AAPL is cheaper on an enterprise value/FCF basis compared to “almost any other meaningful bellwether”.
“Free cash flow is what, in my training, pushes stocks and really moves it. That’s what you get to reinvest in the business, buy other companies and ultimately return cash to shareholders,” Reitzes said.
While Apple’s cash flow didn’t positively impact the stock in mid-2013, Reitzes pointed out that things are different this time.
“Now I think the big surprise over the last year is that Apple is really beating Android to the punch, and that changes the game completely.”
Apple shares were fractionally higher to $122.40 in pre-market trading.