Apple has a new biggest bull on Wall Street. Here's why he thinks the company will reach a $2 trillion market value.
- Apple has a new Wall Street-high price target of $400 per share from Wedbush analyst Dan Ives.
- Long-term iPhone sales growth from the 5G "super cycle" and continued expansion of Apple's Services business can push the tech giant to a $2 trillion valuation by the end of 2021, Ives said in a Thursday note.
- The company joins Microsoft, Alphabet, and Saudi Aramco as the only public companies with valuations greater than $1 trillion, and would become the first US firm to hit the $2 trillion level if Ives' prediction holds true.
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Apple can leap to a $2 trillion market cap by the end of 2021, Wedbush analyst Dan Ives predicted on Thursday.
The tech giant is already up nearly 10% in the year-to-date after an 86% gain in 2019, but Ives sees the company's upcoming 5G iPhones and growing services business driving shares higher over the next few years. The analyst set a new Wall Street-high price target for Apple stock in his latest note, lifting his target to $400 per share from $350.
"While the stock has had a massive rally over the past year and thus far in 2020, we continue to believe this is a 'must own' stock into what we would characterize as a transformational 5G super cycle over the next 12 to 18 months with Apple being our favorite 5G play," Ives wrote.
The iPhone maker closed at a new high on Wednesday, and stands to jump even higher after it announces fourth-quarter earnings next week. The company's "robust" iPhone 11 sales and "jaw dropping" AirPods growth should help Apple beat quarterly estimates and potentially lift its forecast for figures released in March, the analyst said.
Ives also cited a recent trip to Asia as a cause for his continued belief in the "5G super cycle," deeming the upcoming phone lineup a "major growth catalyst" for iPhone sales in the US and China. The hundreds of millions of iPhone sales in 2020 will establish a new trend for phone revenue and could even push Apple to a loftier record, Ives wrote.
"Looking out further, we believe by the end of 2021 Apple has potential to be the first $2 trillion valuation given the 5G tailwinds and services momentum potential over the coming years," the analyst said.
The iPhone accounted for more than half of Apple's revenue for years, but slowing growth for the flagship product led the company to invest more in boosting its Services business. Subscription products including Apple Music, Apple TV+, and iCloud have helped make up for lagging phone sales in recent quarters, and Ives believes the 5G-driven revival of iPhone revenues will support outsized profits for years to come.
Apple currently holds a $1.4 trillion market cap, joining Microsoft, Alphabet, and Saudi Aramco as the only public firms with valuations greater than $1 trillion. Aramco became the first company to breach the $2 trillion valuation mark in December after its record-sized IPO, but its stock price has since pulled its market cap below the historic level.
Ives wasn't the only analyst to lift their Apple target price on Thursday. Rosenblatt Securities analyst Jun Zhang holds a decidedly less optimistic view of the company, but he increased his 12-month target to $250 from $150. Expectations for the company's 5G upgrades are "too high" and the phones' average selling price is falling with the iPhone 11 "cannibalizing the sales of high-end and older iPhones," the analyst wrote. Zhang's target implies a 22% fall from Thursday's closing price.
Rosenblatt holds a "sell" rating on the stock. Wedbush maintains its "outperform" rating.
Apple closed at $319.23 per share on Thursday, up 9.5% year-to-date.
The company has 27 "buy" ratings, 14 "hold" ratings, and seven "sell" ratings from analysts, with a consensus price target of $300.78, according to Bloomberg data.
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