Apple is “dramatically undervalued” and now is the time to buy back the company’s stock, according to activist investor Carl Icahn.
In a letter addressed to Apple’s CEO Tim Cook, Icahn said the company’s current share prices were cheap—half of what they should be.
“Our valuation analysis tells us Apple should trade at $203 per share today, and we believe the disconnect between that price and today’s price reflects an undervaluation anomaly that will soon disappear,” he said.
Shares closed at $100.80 yesterday and rose to $101.53 as of 10:40 am Thursday.
Icahn, whose firm owns 0.9% of Apple’s shares, suggested the company dip into the “persistently excessive liquidity of $133 billion net cash” to make a tender offer. And he urged it was a “very opportunistic time to do so.”
“We feel compelled to do so because we forecast such impressive earnings growth over the next few years, and therefore we believe Apple is dramatically undervalued in today’s market, and the more shares repurchased now, the more each remaining shareholder will benefit from that earnings growth,” he continued.
The billionaire said Icahn Enterprises anticipated the iPhone to “take significant premium market share” pushing Apple to win “what is arguably the most important race of this technological era.”
Icahn assured his writing was not intended to criticize Cook and instead praised Apple’s work “to change the world through technological innovation.” He continued to say the Cupertino, California-based company currently stood as “one of the best investments we have ever seen from a risk reward perspective.”
Earlier this year, the activist investor warred with eBay over governance issues and proposed the e-commerce company split with PayPal.
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