Analyst Predicts Apple Will Hit a $1 Trillion Market Cap

24 Mar 2015 | Author: | No comments yet »

Apple Inc just got its first $1 trillion valuation from Wall Street.

Analysts at Cantor Fitzgerald on Monday said they thought Apple’s shares – which are currently trading at about $127, valuing the company at $733bn – could soon be worth $180 each, which would value the iPhone maker at $1.05tn.In the first Wall Street note to value Apple at more than $1 trillion, analysts at the investment bank said the launch of the Apple Watch and growth in China will propel the technology company to new heights.

Cantor Fitzgerald’s Brian White this morning raises his price target on shares of Apple (AAPL) to $180 from $160, and reiterates a Buy rating, writing that the company ”will enter its first new product category in five years” and that there is more to look forward to, including rumors of a streaming TV service, and also the likelihood of a capital returns increase in April. With his new price target, $180, he’s betting that within 12 months, Apple’s market capitalization (stock price times number of shares outstanding) will have passed $1 trillion. The prospect of an Apple Car is another huge market, he thinks: ”Using IHS Automotive auto unit estimates and pricing from Kelley Blue Book, we estimate a $549 billion opportunity in the U.S. market.” Within the next five years, we believe 15-20% of the mobile subscribers in China could be candidates for a higher-end smartphone such as the iPhone, representing an opportunity for Apple that we estimate at approximately $133 billion to $178 billion.

The iPhone maker’s buyback pace however could depress that valuation slightly — Apple purchased $45bn worth of shares in 2014, lowering its share count to 5.824bn from 6.24bn (when accounting for its seven-for-one stock split). The price target puts Cantor Fitzgerald at the top of the list of Apple bulls, ahead of First Shanghai Securities’ $165 mark and the $160 expectation from Piper Jaffray and Evercore. Brian White, an analyst with the brokerage, put his bullishness down to Apple’s progress in China, where sales climbed 70 per cent in the most recent quarter.

Given the 4G expansion in China, we continue to believe that Apple’s iPhone portfolio is better positioned than ever to benefit from a major upgrade cycle across the country with larger iPhones and a growing relationship with China Mobile. We believe the combination of these forces will drive the market to reward Apple’s stock.” Cantor Fitzgerald was already one of the most bullish analysts on Apple’s stock value potential. However, Cantor Fitzgerald also listed some threats to Apple on its path to a trillion dollar valuation, such as problems retaining staff and avoiding litigation with competitors. White says his current model assumes Apple Watch sales of 20.6 million in the first year on the market and sales of 25.1 million in Apple’s fiscal-year 2016. Morgan Stanley analysts also reckon Apple shares could be worth $160 in a year, but Berenberg Bank, the most bearish, predicts Apple’s shares might crash to $85.

The company’s share price has been boosted by better than expected sales of the iPhone 6, while ExxonMobil has been dragged down by a 50pc collapse in the oil price.

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