Apple Inc. (AAPL)’s Free Cash Flow Dilemma

Credit Suisse is the latest research firm to remain bullish on Apple Inc. (NASDAQ:AAPL), maintaining that an upside is highly likely, having stagnated in the recent months. CNBC’s, Dan Nathan, believes an upgrade from Credit Suisse might be overdue, based on the fact that all the reasons cited for the upgrade have already been factored in, on the current valuation.

“Apple rallying on an upgrade. […] Credit Suisse upgrading the tech name to ‘Outperform’ from ‘Neutral.’ Raising the price target to $130 from $110 citing strong iPhone volumes and cash distribution,” said Mrs. Melissa Lee.

 Nathan expects Apple Inc. (NASDAQ:AAPL) to report impressive margins for Q1 at the back of growing demand for iPhones as the company continues to capture more market share.  The analyst maintains that an entry on a long position at the current trading margins should not be based on iPhone sales.

“To me, I think a lot of it is in the stock here.  I don’t mean to paint too disappointing of a picture on this thing. I don’t think you have to head into the quarter and be long the stock for strong iPhone sales. Obviously, guidance is going to be important but to me, i think you probably going to have an opportunity close to $100,” said Mr. Nathan.

Credit Suisse expects Apple Inc. (NASDAQ:AAPL)’s cash distribution to clock highs of $200 billion. Something that Karen Finerman believes could present some flaw on the stock on the fact that the Cupertino-based company is not expected to use it, all at once.

Apple Inc. (NASDAQ:AAPL) could experience a free cash flow dilemma going forward based on the fact that it does not have direct access to its huge cash deposits, most of which are banked in overseas banks. High tax rates have made it nearly impossible for the Cupertino-based company to ship most of the cash to the U.S. out of fear of being heavily taxed by regulators.

A tax amnesty program in this case is highly needed, if Apple Inc. (NASDAQ:AAPL) is to stay clear of more debt that currently stands at $33 billion according to Nathan.

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