Wells Fargo Comments On Apple's Debt Raise, Hints $6.5 Billion Isn't Sufficient

Maynard Um of Wells Fargo commented in a note on Tuesday that Apple Inc.'s (NASDAQ: AAPL) $6.5 billion debt raise announcement compares to prior U.S. debt raises of $12 billion in 2014 and $17 billion in 2013.

Um notes that when Apple raised debt in April 2013, it had $42 billion of cash onshore and increased its share repurchase program by $50 billion. In 2014, the company had $18 billion in cash onshore and increased its share program by $30 billion. The analyst adds that as of December 2014, Apple had $20 billion of cash onshore and it should be able to easily fund the remaining $27.1 billion of its $90 billion share repurchase authorization and fund a potential 9 percent increase in quarterly dividend, Um is forecasting.

However, Um believes Apple will either have to raise more debt or repatriate cash in order to fund similar historical increases to its share repurchase authorization.

Looking forward, Um said that a dividend and additional share repurchase authorization are potential catalysts but these moves are already “highly anticipated.”

Shares remain Market Perform rated with a valuation range of $105 to $115.

Shares of Apple closed Monday at $118.63.