You’ve probably heard: Apple Inc. (NASDAQ:AAPL) has a ton of cash, with some $252 billion on its balance sheet, a majority of which is held overseas.
Thanks to the new GOP tax cut legislation, the company is planning on bringing it back home. After accounting for taxes and money already promised (such as dividend and share repurchase announcements and capital expenditure plans) the company should have around $40 billion in its pockets to spend.
That’s likely to fire up expectations of M&A activity — something that’s perennially assigned to AAPL given its deep pockets. Especially since many of the companies thought to be buyout candidates are troubled technology stocks with not much else to bolster their prices.
Here are three to watch:
Apple Acquisition Targets: Twitter (TWTR)
Twitter Inc (NYSE:TWTR) shares were recently upgraded to buy by analysts at Aegis Capital on expectations of another 17% rise in price this year — following a 40% increase since the company’s third-quarter earnings report. This is based on predictions of an acceleration in ad sales growth, stable user growth, profitability expansion and, yes, the specter of an acquisition.
The company will next report on Feb. 8, before the bell. Analysts are looking for earnings of 6-cents-per-share on revenues of $689.5 million. When the company last reported on Oct. 26, earnings of 10 cents beat estimates by 4 cents on a 4.2% drop in revenues.
Apple Acquisition Targets: Fitbit (FIT)
Fitbit Inc (NYSE:FIT) shares have been under pressure lately, down roughly 25% from the highs set in early December to return to levels not seen since August. Analysts at ROTH Capital recently initiated coverage with a $10 price target, but that wasn’t enough to get the bulls motivated. The company hasn’t been able to capitalize on its first-mover advantage in wearables despite solid growth in the area, with IDC expecting shipments to double by 2021. All of this makes an AAPL buyout appealing because it could more easily expand its footprint in this area (by offering a cheaper alternative to the Apple Watch).
The company will next report results on Feb. 21, after the close. Analysts are looking for a loss of 6-cents-per-share on revenues of $583.6 million. When the company last reported on Nov. 1, a loss of 1-cent-per-share beat estimates by 3 cents, despite a 22.1% drop in revenues.
Apple Acquisition Targets: GoPro (GPRO)
GoPro Inc (NASDAQ:GPRO) has had a troublesome couple of years, with the Hero 4 falling flat, the Karma drone having a stillborn launch and now cancelled amid tepid demand and the interest in action cameras in general waning. But there are synergies with AAPL, which hasn’t had a dog in the drone fight and could potentially make a play into the personal camera space — an area that Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) is focusing on, for instance.
The company will next report results on Feb. 1, after the close. Analysts are looking for a loss of 22-cents-per-share on revenues of $475.7 million. When the company last reported on Nov. 1, earnings of 15-cents-per-share beat estimates by 13 cents on a 37.1% rise in revenues.