In a research note this morning, Citi analyst Jim Suva told investors that he sees seven potential M&A targets for Apple (AAPL) if tax changes allow it to more easily bring cash back to the U.S. - Netflix (NFLX), Disney (DIS), Hulu, Tesla (TSLA), Activision Blizzard (ATVI), Electronic Arts (EA), and Take-Two Interactive (TTWO). 

WHAT'S NEXT FOR APPLE: While pointing out that as Apple has become larger the company's sales and earnings per share growth have slowed, Citi's Suva noted that the iPhone maker has too much cash, nearly $250B. Apple has avoided repatriating cash to the U.S. to avoid high taxation, the analyst said, but a tax reform may allow the company to put this cash to use as a one-time 10% repatriation tax would give Apple $220B for M&A or buybacks. Suva sees Netflix, Disney and Hulu - the TV streaming joint venture owned by 21st Century Fox (FOXA), Comcast (CMCSA), Disney and Time Warner (TWX) - as three potential M&A targets for the tech giant given their strategic fit, global scale, transaction size, few non-strategic assets and likely impact on Apple's share price, with Netflix as the one he calls "most likely" to be involved in an Apple deal. Moreover, the analyst argued that perhaps the best path for Apple is a hybrid approach, with the company using one third of its cash to acquire Netflix and two thirds of its cash for larger buybacks. This would give the iPhone maker better top-line growth, faster growth in net income and a significant 20% lift in equity value, Suva estimated. He reiterated a Buy rating on Apple's shares.

WHAT'S NOTABLE: Last month, RBC Capital analyst Amit Daryanani argued that it would be "logical" for Apple to acquire Disney if cash repatriation legislation is passed, as it could enable the iPhone maker to gain scale in media/content and boost its Services Business. Furthermore, the analyst noted that such a deal would create a tech/media juggernaut like no other and instantly scale Apple's services, content, and media portfolio, which would make the case for a higher valuation. While he sees the chances of such an acquisition being "greater than 0%," Daryanani acknowledged that the odds of it happening are "low."

VIDEO GAME MAKERS NAMED AS TARGETS: While Netflix, Disney and Tesla have previously been speculated as good fits should Apple look to make a mega-deal, Citi's Suva also identified three game developers, namely Activision, Electronic Arts and Take-Two among Apple's potential takeover targets. Activision Blizzard reported its quarterly results last night, while EA is scheduled to report earnings next week and Take-Two reports later this month.

PRICE ACTION: In morning trading, shares of Apple have gained about 1% to $148, while Netflix and Disney were fractionally lower and fractionally higher, respectively.