Apple Inc. (NASDAQ:AAPL) and BlackBerry Ltd (NASDAQ:BBRY) are captivating investor attention these days between rumbles that Apple is eyeing Walt Disney as an acquisition target and Blackberry’s multi-million dollar victory against Qualcomm in court last week. While one of Wall Street’s best performing analysts is bullish on Apple, believing the power of these two titans could rattle competition just as it would excite investors, another analyst is marveling at the win, seeing it as a solid short-term advantage. Let’s dive in:
Apple + Disney? Hollywood and Silicon Valley Better Start Quaking
Is Apple raring to take over Walt Disney with a $237 billion hook? For RBC Capital analyst Amit Daryanani, while there is a “‘greater than 0%’ probability” on AAPL circling DIS for a prospective M&A deal, this is ultimately not what matters most. The true question lies in if the market believes the tech giant has its eyes set on acquiring the entertainment giant, and the rumor mill now sees new investor interest that has risen in the past few months.
Of course, “There are plenty of factors to consider,” yet as Daryanani sizes up the variables, “[…] such a deal would create a tech/media juggernaut like no other and instantly scale AAPL’s services, content, and media portfolio, which would make the case for a higher valuation.”
Therefore, the analyst reiterates an Outperform rating on shares of AAPL with a $157 price target, which represents an 11% increase from where the stock is currently trading.
When glancing ahead to a potential duo stock giant, “The resultant company would be massive, with enough cash and balance sheet capacity to change the nature of the hardware, service, and content industries,” […] “If there’s a deal out there that would strike fear in the hearts of Silicon Valley and Hollywood, this could be it,” notes Daryanani.
“In addition to being financially compelling, we’ve identified various attributes that a combined AAPL + DIS would enjoy, including unrivaled scale in content creation and distribution with the potential to create an instantly competitive global SVOD/streaming service. And, a massive balance sheet and technical capability to pursue future sports rights and protect live viewership moats, and integration of AAPL technologies into DIS Parks and Consumer Products. We think Hollywood and Silicon Valley would be very worried if these two titans came together, while consumers and investors would probably stand to benefit the most.”
Estimating an enterprise value looping $257 billion and an equity funding valued at approximately $237 billion, Daryanani predicts Apple has $200 billion on cash on hand for acquisitions. The analyst finds the agreement “highly accretive” for shareholders and though he finds the deal “would need to offer significant strategic merits” to rock the price, “we think it does.”
Amit Daryanani has a very good TipRanks score with an 81% success rate and a high ranking of #24 out of 4,555 analysts. Daryanani yields 20.5% in his annual returns. When recommending AAPL, Daryanani garners 28.8% in average profits on the stock.
TipRanks analytics exhibit AAPL as a Buy. Out of 37 analysts polled by TipRanks in the last 3 months, 28 are bullish on Apple stock, 7 remain sidelined, and 2 are bearish on the stock. With a return potential of 8%, the stock’s consensus target price stands at $152.93.
Blackberry Snags Surprising Victory
Last Wednesday, Blackberry made waves with the news that the smartphone maker was granted $814.9 million coupled with interest as well as compensation for legal fees from Qualcomm- a decision that cannot be appealed. It is a huge win for Blackberry, with a favorable decision that the company had overpaid QCOM for handset unit royalties in a five-year span between 2010 and 2015. This license agreement only impacts Blackberry, as no other agreements with QCOM licensees are affected at this time.
Though William Blair analyst Anil Doradla welcomes the ruling as boding well for Blackberry, the good news is not enough to sway him from the sidelines on the long-term picture. As such, the analyst reiterates a Market Perform rating on BBRY without listing a price target.
Overall, “We view this result as a surprising positive for BlackBerry and a negative for Qualcomm. From BlackBerry’s perspective, this payment represents roughly $1.38 per share in cash, which will provide additional cushion as the company continues to invest in its transition away from hardware and toward software and services. We believe that this news, combined with the company’s continued efforts to move toward a software business model, will be a positive in the near term.”
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Anil Doradla is ranked #267 out of 4,555 analysts. Doradla has a 68% success rate and realizes 18.0% in his yearly returns. When recommending BBRY, Doradla earns 0.0% in average profits on the stock.
TipRanks analytics show BBRY as a Buy. Based on 5 analysts polled by TipRanks in the last 3 months, 2 rate a Buy on Blackberry stock while 3 maintain a Hold. The 12-month average price target stands at $9.25, marking a 7% upside from where the stock is currently trading.