Apple has a clear path to be the first to hit a $2 trillion valuation

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in General Discussion
With a current valuation of $1.4 trillion and climbing, analyst Amit Daryanani thinks the world's most valuable company could be the first to hit $2 trillion.

Apple was the first company to hit a $1 trillion market capitalization. Evercore analyst Amit Daryanani thinks it can be the first to hit $2 trillion.
Apple was the first US company to hit a $1 trillion market capitalization. Evercore analyst Amit Daryanani thinks it can be the first to hit $2 trillion.


In a research note on Tuesday, lead analyst Amit Daryanani laid out a four-year plan for Apple to hit a $2 trillion market capitalization -- a milestone no other company has reached. By the September 2024 fiscal year, the analyst believes that Apple can reach an earnings per share (EPS) of $23. Based on a model of 14% EPS growth per year, reaching a number just shy of double his current EPS estimate of $12.72 for the 2020 fiscal year.

Daryanani's analysis doesn't assume that Apple will expand into new markets, just that the company's existing core businesses will grow. The plan implies annual appreciation in the mid-teen percentages.

The analyst is also forecasting sustained double-digit growth in Apple's services and wearables spheres. That's based on an assumption of higher average revenue per user and monetization of the user base.

Corporate gross margin will continue to grow, Daryanani said, largely due to the fact that Apple services -- which continues to grow faster than hardware -- operates with margins in the 60% range. That's nearly double the high-30s margins for the company as a whole.

Daryanani thinks wearables and services can hit $60 billion and $100 billion in revenue, respectively, over the next few years.

Another note is that Apple stock "re-rates" to a 24x price to earnings (P/E) multiple, which he points out is "still a healthy discount" to the 26x to 27x P/E for the company's rivals in luxury and consumer products.

Apple will also continue "aggressively" buying back shares, with an expectation that the Cupertino firm will reduce its share count by about 1 billion in the next four years. That equals out to about 3.6 billion shares at the end of fiscal year 2024, compared to 4.6 billion shares tracked in fiscal year 2019.

Based on that number of shares, Apple's stock price would need to be over $550 to hit a $2 trillion market capitalization. But, again, Daryanani expects that to be feasible.

The $2 trillion prediction comes one week after Apple's share price largely recovered from a coronavirus-fueled plunge earlier in 2020. Hitting pre-crisis levels took until May, but Apple climbed back to a $1 trillion valuation in April, following a plunge due to COVID-19 in March.

Although supply chain and market factors in China played a role, Apple's recovery efforts included sustained growth in services and wearables, as well as the launch of products tailor-made for an economically uncertain environment, such as the iPhone SE, or products well-suited for the boom in work from home, like the new iPad Pro and MacBook Air models.

During Apple's last earnings call, the company reported a new all-time revenue high in services, and Apple CEO Tim Cook noted that the company's investments in the sector were succeeding. Smartphone and consumer electronics demand is still uncertain, though Apple is largely expected to debut a stable of four "iPhone 12" models in the fall, which are rumored to feature 5G connectivity and other upgrades.

Daryanani maintained his Outperform rating on Apple and lifted his 12-month price target to $360, up from $345.

Shares of Apple were trading at $321.78 on the NASDAQ Tuesday morning, down 0.049% on the day.

Comments

  • Reply 1 of 16
    lkrupplkrupp Posts: 9,472member
    So this guy has a four year 'plan' to get AAPL to $2T? Then why isn't he already Apple's CFO? But remember, the Dutch East India Company was worth $7.9T in 1637 so Apple is just a shit-house gnat, right? When Apple hit $1T for the first time this factoid went viral in the usual attempt to downplay and denigrate Apple's accomplishment. Every Apple hater has the link to this drivel saved in their Notes apps.
    SpamSandwichwatto_cobra
  • Reply 2 of 16
    red oakred oak Posts: 886member
    $23 EPS in FY24?   Sounds about right.  Ditto 1 billion reduction in shares outstanding

    Projections from my model here 

     :) 



    edited June 2020 watto_cobra
  • Reply 3 of 16
    mknelsonmknelson Posts: 830member
    lkrupp said:
    So this guy has a four year 'plan' to get AAPL to $2T? Then why isn't he already Apple's CFO? But remember, the Dutch East India Company was worth $7.9T in 1637 so Apple is just a shit-house gnat, right? When Apple hit $1T for the first time this factoid went viral in the usual attempt to downplay and denigrate Apple's accomplishment. Every Apple hater has the link to this drivel saved in their Notes apps.
    A rather odd comedy-parison. AAPL's valuation is the share price x share value. The DEI valuation includes capital like ships, entire countries, slaves, so much pepper!

    …So much pepper…
    ronnchasmwatto_cobra
  • Reply 4 of 16
    alanhalanh Posts: 70member
    lkrupp said:
    Every Apple hater has the link to this drivel saved in their Notes apps.
    Surely a true Apple hater wouldn’t have a Notes app?


    chasmwatto_cobra
  • Reply 5 of 16
    apple ][apple ][ Posts: 9,233member
    As for Apple hitting 2 Trillion, I'll still be holding my stock when that happens, so I think that the question is not if, but when.

    Remember before, when all of these people and other not so smart people were babbling about how it was impossible for Apple to even hit 1 trillion? Something about the law of large numbers or some other kind of nonsense that these people were talking about. Maybe large numbers are a problem for certain people to comprehend, especially those who have a hatred for Apple, and those who doubt Apple's success and great potential, but for others who believe in facts and reality, it's not a problem at all.
    edited June 2020 lkruppwatto_cobra
  • Reply 6 of 16
    hentaiboyhentaiboy Posts: 1,244member
    I see AAPL is about $5 off the year’s high. Unbelievable with what’s going on.

    BTW, why doesn’t AI post the share price on the home page any longer?
    edited June 2020 jony0lkruppSpamSandwichlolliverwatto_cobra
  • Reply 7 of 16
    sacto joesacto joe Posts: 895member
    mknelson said:
    lkrupp said:
    So this guy has a four year 'plan' to get AAPL to $2T? Then why isn't he already Apple's CFO? But remember, the Dutch East India Company was worth $7.9T in 1637 so Apple is just a shit-house gnat, right? When Apple hit $1T for the first time this factoid went viral in the usual attempt to downplay and denigrate Apple's accomplishment. Every Apple hater has the link to this drivel saved in their Notes apps.

    A rather odd comedy-parison. AAPL's valuation is the share price x share value. The DEI valuation includes capital like ships, entire countries, slaves, so much pepper!


    …So much pepper…

    Valuation defined by market capitalization is Share Price X Share Count. Typo?

    The issue of “market cap” is a red herring. A company (Microsoft, for example) can more easily grow market cap by NOT buying back shares. The comparative Price (per share)/Earnings (per share), or P/E ratio, gives this away. While both are large Companies, Apple has about twice the revenue of Microsoft, and a substantially larger EPS (earnings per share). This shows up as a substantially larger Microsoft  valuation, or P/E ratio.

    The point being that market cap doesn’t reflect real comparative value, only the comparative value that the collective market, on any given day, chooses to assign a company’s stock. True value is a much squishier quantity, and has little to do with share count or where a company’s sales are in the midst of pandemics or race riots.

    Which is why we can see AAPL at these near-all time highs in these fractious times: Investors are “betting” on Apple’s long term future, not its present struggles. Also, compared to many other businesses in these times, Apple is doing quite well at staying intact.
    edited June 2020 chasmwatto_cobra
  • Reply 8 of 16
    chasmchasm Posts: 2,395member
    1. Hentaiboy: AppleInsider does, in fact, still post AAPL stock price in the upper right of its masthead on the main page.

    2. I truly lol'd at LKrupp, Mknelson, and AlanH's very funny comments. Thanks!

    3. I also expect Apple to hit $2T at some point in the foreseeable future, but I'm fully expecting a delayed (and strong) recession to hit later THIS year. While I fervently hope for a V-shaped recovery, I'm expected more of a W one due to a (incredibly likely in the US) second wave of Covid-19, and an eventual stock-market crash. That said, if one can look longer-term than the next two years, such a crash would be a tremendous buying opportunity for a long-term hold that will (as it has for me) pay off handsomely. So while I'm not hoping for a crash, I'm prepared for that possibility. I think the $2T mark will take longer to get to than most people (and analysts) seem to think -- there are some real economic "hard waters" ahead, especially if things don't change (worldwide) significantly in the next year or two.
    lolliverwatto_cobra
  • Reply 9 of 16
    jony0jony0 Posts: 345member
    chasm said:
    1. Hentaiboy: AppleInsider does, in fact, still post AAPL stock price in the upper right of its masthead on the main page.

    I believe the AAPL stock price could be just a US thing now, or selected countries, as I haven't seen it here in Canada since the big redesign.
    lolliverwatto_cobra
  • Reply 10 of 16
    apple ][apple ][ Posts: 9,233member
    AAPL stock price shows for me, upper right hand corner of main page.  I'm US, not that I think that has anything to do with it.
    watto_cobra
  • Reply 11 of 16
    fastasleepfastasleep Posts: 5,691member
    jony0 said:
    chasm said:
    1. Hentaiboy: AppleInsider does, in fact, still post AAPL stock price in the upper right of its masthead on the main page.

    I believe the AAPL stock price could be just a US thing now, or selected countries, as I haven't seen it here in Canada since the big redesign.
    It only shows up at the 1200px breakpoint. I don't even browse in windows that wide on my 30" desktop monitor. 
    jony0lolliverwatto_cobra
  • Reply 12 of 16
    artdentartdent Posts: 66member
    AAPL price doesn’t show on AI on my iPad on any browser, regardless of whether I call up the mobile or desktop site. Changing Content Blocker settings doesn’t help, neither does switching from portrait to landscape. I’m in the U.S.
    lolliverwatto_cobra
  • Reply 13 of 16
    jony0jony0 Posts: 345member
    jony0 said:
    chasm said:
    1. Hentaiboy: AppleInsider does, in fact, still post AAPL stock price in the upper right of its masthead on the main page.

    I believe the AAPL stock price could be just a US thing now, or selected countries, as I haven't seen it here in Canada since the big redesign.
    It only shows up at the 1200px breakpoint. I don't even browse in windows that wide on my 30" desktop monitor. 
    Aha !!! Thank you. It does indeed show up when you stretch wide enough — or make the font smaller. I don't browse that wide either.
    watto_cobra
  • Reply 14 of 16
    cincyteecincytee Posts: 344member
    mknelson said:
    lkrupp said:
    So this guy has a four year 'plan' to get AAPL to $2T? Then why isn't he already Apple's CFO? But remember, the Dutch East India Company was worth $7.9T in 1637 so Apple is just a shit-house gnat, right?
    A rather odd comedy-parison. AAPL's valuation is the share price x share value. The DEI valuation includes capital like ships, entire countries, slaves, so much pepper!

    … So much pepper …
    And nutmeg. Don't forget the nutmeg. Mmmmmm.
    edited June 2020 watto_cobra
  • Reply 15 of 16
    MacProMacPro Posts: 19,382member
    What amazes me is the speed the market CAP went from 1T to 1.4T .  I am sure the experts have a simple explanation but I keep remembering the experts explaining why Apple could never reach 1T due to LLN.
    sconosciutowatto_cobra
  • Reply 16 of 16
    MacPro said:
    What amazes me is the speed the market CAP went from 1T to 1.4T .  I am sure the experts have a simple explanation but I keep remembering the experts explaining why Apple could never reach 1T due to LLN.
    I had forgotten all about the LLN "story". On the day the below article was published (24 Feb 2012), AAPL closed at $74.63. IOW in the 8 yrs since then, it's gone up over 330% (~4.3x). I guess they gotta write about something...

    https://www.nytimes.com/2012/02/25/business/apple-confronts-the-law-of-large-numbers-common-sense.html
    edited June 2020 watto_cobra
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