Icahn: Apple is undervalued

Cites move into TV, cars; puts share price at $240

Apple has popped back on the radar of billionaire investor Carl Icahn.

In a letter sent to Apple CEO Tim Cook on Monday, Icahn said shares of Apple are still “dramatically undervalued” at $130 a share as of midday trading. His price on Apple shares? $240.

Icahn cites Apple’s move into two new markets: television by next year and cars by 2020, which he says boast a combined market of $2.2 trillion.

Multiple reports have surfaced this year of Apple’s interest in both sectors. The tech giant is expected to share details later this year of a streaming TV service connected to a revamped Apple TV set-top box. The service will reportedly feature 25 channels, including top broadcasters ABC, CBS and Fox.

The company is also making huge gains in China. FBR Capital Markets analyst Daniel Ives predicts China will pass the Americas and Europe as Apple’s biggest market by their 2017 fiscal year.

Meanwhile, Icahn is again urging the tech giant to use all that free cash (which currently sits at $194 billion) for a much larger buyback plan. “Apple has clearly demonstrated a track record of excellence and success when entering new categories,” Icahn’s letter to Cook said. “We expect this to continue with the Apple Watch, the television, and the car, and the world will look back on today’s undervaluation as a fascinating example of market inefficiency.”

This isn’t the first time Icahn has pressured Apple into increasing share buybacks. The investor has been pushing for a larger buyback since 2013, when he disclosed a “large position” in Apple.

In a February letter on his personal website, Icahn said he holds 53 million shares of Apple valued at $6.5 billion. He also predicted Apple would be the first company to reach $1 trillion in market value. Last quarter, Apple announced it boosted its buyback plan to $140 billion and hiked its quarterly dividend by 11%.