"We identified a handful of potential M&A targets. Three are media firms: Netflix, Disney and Hulu. Three are video game developers: Activision, Electronic Arts and Take-Two. And, one is an auto maker: Tesla. Each target confers some strategic benefit to Apple," Suva said. He has a buy rating on Apple.
Investors in Apple could see as much as a 20 percent gain from an Apple acquisition of Disney, or 7 percent from a purchase of Tesla or Netflix, Suva said. The iPhone maker could also use part of the cash to increase buybacks, he said in the note, resulting in "a significant 20 percent lift" in the share price.
Attractiveness of acquisition candidates (deal size, probability, impact to Apple shares)
Source: Citi Research
Apple did not immediately respond to a CNBC request for comment. Management said on the earnings call that it was difficult to speculate on what might happen on tax reform.
The Citi report is also not the first time analysts have speculated about the tech giant buying companies like Netflix or Tesla.
Suva's team of analysts found that Netflix was the most logical target after examining five factors: strategic fit, global scale, transaction size, few non-strategic assets and likely impact on Apple's share price.
"Like Apple, Netflix is global, has no non-core assets (like Disney) and is disrupting the global video ecosystem. Apple could help accelerate this disruption," Suva said. Non-core assets refer to those not essential to a company's operations.
To be sure, respected Wall Street academic on corporate valuations Aswath Damodaran told CNBC earlier this week that the best thing for the iPhone maker to do with the cash is "probably nothing."
"Cash is not the problem. It's what they could do with the cash that could potentially be a problem," Damodaran said. "It can become a problem if people stop trusting management and you know what could cause people to stop trusting management? A big acquisition."
The iPhone maker has also avoided large acquisitions. The only transaction over $1 billion during the last six years was a $3 billion purchase of Beats Electronics in 2014, according to the Citi report.
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