- Gene Munster informed CNBC that Apple has a path to $200 per share.
- “It needs to be anchored in revenues. That’s the powerful piece about the Apple story,” the tech financier said.
- The former Wall Street analyst added that he thinks Apple will be the best performer among FAANG stocks in 2021.
Tech investor Gene Munster informed CNBC on Thursday he sees a sensible course for Apple to reach a $3 trillion market capitalization in the future.
The iPhone maker ended up being the very first publicly traded U.S. company to reach a $2 trillion market cap in August– a milestone Munster foresaw in January when he made the case for the stock to trade 50% higher. Since Thursday, with its stock around $133 per share, Apple was valued at nearly $2.3 trillion.
Munster, who covered Apple as a long time expert at financial investment bank Piper Jaffray, stated on ” Squawk Box” that he believes the California-based business can reasonably reach $200 per share. That would put its market cap over $3 trillion.
“It requires to be anchored in profits. That’s the effective piece about the Apple story,” said Munster, who co-founded endeavor capital firm Loup Ventures. He said his forecast is based on Apple trading at a price-to-earnings ratio or multiple, of 35 for 2022 profits estimates.
“It’s a year out there but I’m fast-forwarding the discussion to the middle and back half of next year, and we’ll be talking about 2022 at that point. If the market can sustain these 35 multiples– you understand, we’re not discussing an Amazon-like several here– I believe that course exists,” Munster said.
Apple’s existing price-to-earnings ratio is almost 41 after the stock skyrocketed about 81% this year. Amazon, which has seen its stock increase about 76% this year, trades at roughly a 95 numerous.
One catalyst that could assist propel Apple greater is the larger adoption of remote work spurred on by the coronavirus pandemic, Munster said.
“This is typically considered a play on iPhone, a 5G play. That’s excellent. That will affect the numbers in a positive method, however, this velocity of digital change, I think it’s powerful,” Munster said. “People working from anywhere are going to be arming up in the next 12 to 24 months, buying more Macs, iPads, services.”
Munster likewise repeated his belief that Apple’s multiple might withstand additional expansion as financiers reevaluate the business, which has in recent years pushed to produce more earnings from services to enhance its sales of hardware.
For his part, Munster said he thinks Apple might utilize its hardware service into service, such as buying a Mac on a subscription. “We believe that that’s coming, and more discuss autos is a big chance for Apple’s several,” Munster stated, pointing to reports about Apple possibly making an electrical car in a couple of years.
More generally, he stated he thinks Apple will continue its strong stock performance in 2021, especially compared with its so-called FAANG brethren. In addition to Apple, the group of tech companies likewise includes Amazon, Facebook, Google-parent Alphabet, and Netflix.
“We believe that there will be a further fracturing of FAANG,” Munster said, with Facebook and Netflix lagging behind Apple and Amazon. “I believe for 2021, the performance is going to return from Apple. It may appear tone-deaf for a business to lead FAANG for three straight years, but I think that in truth will take place. I think this has a track to $200 [per share]”