Buy Apple because it could buy back more than $120 billion of stock

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First customers display their iPhone X sets at an Apple showroom in Sydney, Australia on November 3, 2017.

Apple’s capital return program will get much larger, according to one Wall Street firm.

UBS reiterated its buy rating on Apple shares, saying the recently passed tax reform law will free up new funds for the company’s shareholder return program.

“Apple clearly is a beneficiary of overseas cash repatriation,” analyst Steven Milunovich wrote in a note to clients Monday. “Repatriation of ~$250bn of offshore cash should increase the rate of Apple’s share buybacks since the company believes the stock remains attractive in that its services business is undervalued.”

Milunovich reaffirmed his $190 price target for Apple shares, representing 9 percent upside to Friday’s close.

He noted the company has been buying back about 5 percent of its shares in recent years. He estimates repatriation will unleash an incremental $25 billion and Apple’s annual free cash flow will stay around $60 billion. As a result, Milunovich believes the company could buy back $122 billion worth of its shares through 2019.

“Supply chain noise and mixed demand data points create near-term uncertainty and debates continue regarding how Apple performs with a maturing iPhone business,” Milunovich wrote. “The potential that Apple could buy 14% of the company at $90bn net cash and even more at lower levels of net cash should limit any potential stock downside, in our view.”