Photographer: Yuriko Nakao/Bloomberg

Billionaire Icahn Says Apple Is One of Best Buys in Decades

Carl Icahn, one of Apple Inc.’s largest shareholders, said the iPhone maker’s stock is undervalued after it posted record earnings, and said his $203 target price was too low. Icahn also suggested buying back more shares.

“I don’t recommend too many stocks unless I think it’s a no-brainer,” Icahn said Wednesday on CNBC. “Apple, I think, is one of the best buys in the last couple of decades.”

Apple reported a record $18 billion quarterly profit on Tuesday, fueled by holiday sales and the new, larger-screened iPhones. Shares of the Cupertino, California-based company rose 5.7 percent to $115.31 at the close in New York, the biggest daily gain since April 24. Icahn also said he had been too conservative on Netflix Inc., the top performer this year in the Standard & Poor’s 500 Index, with a 30 percent increase.

“Netflix has had a great almost oligopoly position,” he said. “I wish I had bought more.”

Apple today is comparable with dominant companies such as Polaroid and Xerox decades ago, which traded at 40 to 50 times earnings at their peak, Icahn said in an interview with Bloomberg News. He likened Apple’s valuation to investors ignoring the value of Nabisco after it was spun off by RJ Reynolds Tobacco Holdings Inc. in the 1990s.

“A great deal of money was made by investors who bought Nabisco at that time and held it for only three to four months,” Icahn said by telephone. “Companies as good as Apple eventually get to an equilibrium and find their way up,” Icahn said in a phone interview. “When you find these -- and you can afford it and you have the staying power -- you must go in as big as you possibly can.”

Icahn told CNBC he bet conservatively on Los Gatos, California-based Netflix because of net neutrality concerns, referring to his October 2013 sale of more than half his stake. When the investor parted with 2.99 million Netflix shares, his son, Brett Icahn, 35, was one of the biggest critics. The younger Icahn and fund co-manager David Schechter revised their contracts so they would be compensated based on the performance of the shares even after they were sold.

Carl Icahn, 78, is the 30th-richest person in the world, with a $23.8 billion net worth, according to the Bloomberg Billionaires Index.

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