Citigroup analysts believe the passage of US tax reforms has increased the likelihood that Apple will acquire Netflix in 2018.
Citigroup says the chances of Apple taking over the online streaming company have risen from about 20-30% to 40%.
The cut in the top rate of US corporate tax from 35% to 21% along with changes designed to encourage US companies to repatriate cash from overseas subsidiaries will greatly boost Apple´s cash pile and its capacity to purchase US-listed firms such as Netflix, according to Citi.
Citi ranks Netflix as the top acquisition target for Apple as the former creates content that can be readily accessed from iPhones.
"Historically, Apple has avoided repatriating cash to the US to avoid high taxation. As such, tax reform may allow Apple to put this cash to use. With over 90% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220bn for M&A or buybacks,” said Citi analysts Jim Suva and Asiya Merchant in a research note.