Piper Sandler raises Apple stock target to $200, says $4T market cap is in reach

AppleInsider

Piper Sandler has raised its Apple price target by $25 to $200, on the strength of its portfolio of hardware and services heading into 2022.

Apple logo on building. Credit: Laurenz Heymann/Unsplash

In a note to investors seen by AppleInsider, lead Piper Sandler analyst Harsh Kumar says that investors should look at Apple as a "place to hide" in the current broader technology environment. That's because of current hardware and services momentum, as well as potential points of expansion.

Kumar notes that Apple's iPhone is still its most important asset. He sees continued momentum for the device into 2022 as 5G networks are built out and carrier subsidies boost iOS device adoption. The analyst expects Apple to see solid trends in China and for India to becoming a major market in the next few years.

On rumors that Apple is developing a first-party modem for its iPhones, Kumar said the move could save the company up to $5 billion in operating income as part of the 2023 iPhone cycle.

Kumar expects strong upcoming trends across Apple's services and wearables sectors to offset Mac and iPad weakness. Expectations are already tempered for the Mac and iPad, and Kumar notes he is more cautious in 2022 as pandemic-driven growth stabilizes.

In the future, the analyst believes that Apple's potential forays into the automotive and healthcare sectors as "the next major growth markets for the company." Those two areas could be a catalyst that drives the company's market capitalization to $4 trillion and beyond, he added.

All in all, Kumar says that Apple "could be the place to hide in the technology market."

"With a strong brand, solid free cash flow and margins, revenue/EPS growth, and a shareholder return program, we believe
Apple could be the place to be in tech as we weather the broader market environment," the analyst writes.

Kumar's new 12-month Apple price target of $200 is based on a 33x price-to-earnings multiple applied to Piper Sandler's 2022 Apple earnings estimates. He says the new higher price target multiple reflects the firm's "confidence in 2022 dynamics and the 'flight to safety' in the current market environment."

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viclauyyc

I love Apple. But I really wonder can any company worth that much of money without stock market hype. 

Sure Apple makes shit tons of money each year. But still a very very long way to 3 or 4Trillion. Even count all the IP, talent, property, etc. I don’t think it will come close to 1/4 of that value. 

After all, Apple is not East India company that monopolize half of the world at that time. 

larryjw

It only hit $3T intraday a few weeks ago. Let Apple stabilize at the $3T level first before hyping it to $4T. 

patchythepirate

viclauyyc said:

I love Apple. But I really wonder can any company worth that much of money without stock market hype. 

Sure Apple makes shit tons of money each year. But still a very very long way to 3 or 4Trillion. Even count all the IP, talent, property, etc. I don’t think it will come close to 1/4 of that value. 

After all, Apple is not East India company that monopolize half of the world at that time. 

Well, Apple does come pretty close to monopolizing worldwide profits in its respective hardware categories. If Tesla (which I also like) can get away with a PE of 350, AAPL looks pretty good with its PE of 30. Seems like it's always been this way.. AAPL seems to benefit the least from market hype.

waveparticle

viclauyyc said:

I love Apple. But I really wonder can any company worth that much of money without stock market hype. 

Sure Apple makes shit tons of money each year. But still a very very long way to 3 or 4Trillion. Even count all the IP, talent, property, etc. I don’t think it will come close to 1/4 of that value. 

After all, Apple is not East India company that monopolize half of the world at that time. 

It is easy if AAPL investors have the money to buy at $4T price. 

jdw

I bitcoin or dogcoin worth the prices they command today? What about NFTs?  And is an Apple I really worth $200k?

Fact is that people make things as expensive as they are.  People give worth to things.  If people say Apple is worth $10 trillion, it shall be so.

My concern as an AAPL investor since 1999 is that AAPL is not in a price bubble that will burst and leave us with little value.  I want to see continue stock appreciation, but at a reasonable level that isn't the makings of a balloon ready to pop.  I want to be holding AAPL shares 10 years hence, if possible, and liking it.  But whether that is true or not depends on where people like you put your money.  If everyone pulls money from AAPL all at once, we'll have a major problem for the market as a whole, since few funds these days lack AAPL as a holding.

radarthekat

viclauyyc said:

I love Apple. But I really wonder can any company worth that much of money without stock market hype. 

Sure Apple makes shit tons of money each year. But still a very very long way to 3 or 4Trillion. Even count all the IP, talent, property, etc. I don’t think it will come close to 1/4 of that value. 

After all, Apple is not East India company that monopolize half of the world at that time. 

Half the world wasn’t so much at that time.  Apple prints cash in one of the largest most important markets in not just technology but in all of society.  Computers & Communications might as well be the keys to the global economy.  Transportation and healthcare are two more gigantic and critically important markets.  Stuff the East India Company would gladly have traded all the tea in China and their entire spice trade for.

lkrupp

Ya' gotta scratch your head at Wall Street sometimes. In a matter of a few years they went from being irrationally bearish about AAPL to being irrationally exuberant. From Apple is done for to Apple rules the world. Of course my IRA portfolio is happy with its AAPL holdings for now.

Xed

viclauyyc said:

I love Apple. But I really wonder can any company worth that much of money without stock market hype. 

Sure Apple makes shit tons of money each year. But still a very very long way to 3 or 4Trillion. Even count all the IP, talent, property, etc. I don’t think it will come close to 1/4 of that value. 

After all, Apple is not East India company that monopolize half of the world at that time. 

Let's consider that. You don't think it's worth 1/4 of their current $3T valuation yet even now their PE Ratio is only 30. Rather, it would take them 30 years to earn that much in profit if their last quarter's earnings was the same for the next 30 years, or in this case one-quarter that, or 7.5 years. Yeah, that seems doable even without considering the value of the patents, the brand, the products, facilities, the talent, and all other aspects that add to a company's valuation.

GeorgeBMac

viclauyyc said:

I love Apple. But I really wonder can any company worth that much of money without stock market hype. 

Sure Apple makes shit tons of money each year. But still a very very long way to 3 or 4Trillion. Even count all the IP, talent, property, etc. I don’t think it will come close to 1/4 of that value. 

After all, Apple is not East India company that monopolize half of the world at that time. 

Apple's stock price has their PE at over 30.  That has little to do with performance and mostly to do with the Fed.   Essentially the Fed has kept PEs high since 2008 by making bonds and savings money losers -- and then doubled down in 2020.

COVID and the Fed teamed up to make tech the only game in town (COVID trashed main street while the Fed trashed bonds) -- so money poured in.  But they just announced they're going to stop dropping their billions of coins into the stock market piggy bank and then even start charging it interest -- a complete reversal from their policies since COVID took down main street.

Currently, Apple is priced at nearly triple what it was when COVID showed its ugly face -- and that was supposed to be a great stock market!  Is Apple really worth three times what it was worth 2 years ago?

There are few who think tech will be a winner in 2022.

The big question is:  How tight is too tight?  And does the Fed know the answer to that question?

GeorgeBMac

waveparticle said:

viclauyyc said:

I love Apple. But I really wonder can any company worth that much of money without stock market hype. 

Sure Apple makes shit tons of money each year. But still a very very long way to 3 or 4Trillion. Even count all the IP, talent, property, etc. I don’t think it will come close to 1/4 of that value. 

After all, Apple is not East India company that monopolize half of the world at that time. 

It is easy if AAPL investors have the money to buy at $4T price. 

Since 2020 they've had nothing else to buy.   If the Fed lets the markets return to normal that will change.  You might even start wondering about $2T instead of $4T.

"Irrational Exuberance" is fun while it lasts.  And with a PE over 30...

wood1208

When AAPL was closed to $1T, everyone argue how it can be ? Not happening. Than came $2T, now $3T and prediction of $3.5T-$4T. So, rise higher and think it is just a marker in a long journey of whatever !!

GeorgeBMac

Xed said:

viclauyyc said:

I love Apple. But I really wonder can any company worth that much of money without stock market hype. 

Sure Apple makes shit tons of money each year. But still a very very long way to 3 or 4Trillion. Even count all the IP, talent, property, etc. I don’t think it will come close to 1/4 of that value. 

After all, Apple is not East India company that monopolize half of the world at that time. 

Let's consider that. You don't think it's worth 1/4 of their current $3T valuation yet even now their PE Ratio is only 30. Rather, it would take them 30 years to earn that much in profit if their last quarter's earnings was the same for the next 30 years, or in this case one-quarter that, or 7.5 years. Yeah, that seems doable even without considering the value of the patents, the brand, the products, facilities, the talent, and all other aspects that add to a company's valuation.

Apple's TTM (trailing twelve month) PE (Price Earnings ratio) is 31.98.   That means, if nothing else changes, it will take them 32 years to earn their stock price.

Three years ago it was 12.

Stock prices are partially due to fundamentals and partially due to what people value -- which is partly due to what alternatives they have for their money.  In this case, not a lot has changed with Apple's fundamentals.  That leaves market perception and alternatives -- which is very real, but fickle.

Apple as a company is a great bet.   But is their stock price?

larryjw

We seem to be seeing agreement that the  S&P 500 will increase 9% in 2022, a bit less than up 27% in 2021. So I would expect Apple end 2022 at 190 — still under $3T. 

But, will Apple surprise us with product? 

GeorgeBMac

larryjw said:

We seem to be seeing agreement that the  S&P 500 will increase 9% in 2022, a bit less than up 27% in 2021. So I would expect Apple end 2022 at 190 — still under $3T. 

But, will Apple surprise us with product? 

There's lots of nuance, if's and but's to that.  Plus any increase won't be across the board but sector specific.