Apple’s $3T m-cap: Veteran analyst, who predicted its run to $2T, reveals path to big milestone in sight
Apple reported a net income of $57.4 billion in its last fiscal year ended September 2020.
Gene Munster, a veteran Wall Street analyst who had rightly predicted Appleâ€™s run to $2 trillion market cap back in January 2020, believes that the Steve Jobsâ€™ company has a path to $3 trillion as well. Munster had covered Apple for a long time as an analyst at the investment bank Piper Jaffray. He told CNBC recently that the iPhone maker can realistically reach $200 per share. This would push Appleâ€™s market cap beyond $3 trillion from the current $2.22 trillion market cap with its stock trading around $132 per share on Friday. Apple became the first publicly traded US firm to hit the $2 trillion market cap in August 2020.
Munster, who later co-founded venture capital firm Loup Ventures, said that his belief was based on Apple trading at a price-to-earnings ratio, or multiple, of 35 for 2022 earnings estimates. The Price-to-earnings ratio refers to the dollar amount an investor can look at to invest in a firm in order to get one dollar of that companyâ€™s earnings. In a way, it indicates how much an investor may pay per dollar of earnings and hence is referred to as the price multiple. â€œItâ€™s a year out there but Iâ€™m fast-forwarding the conversation to the middle and back half of next year, and weâ€™ll be talking about 2022 at that point. If the market can sustain these 35 multiples â€” you know, weâ€™re not talking about an Amazon-like multiple here â€” I think that that path is there,â€� he added.
Appleâ€™s current price-to-earnings ratio isÂ 40.51 after its stock soared around 81 per cent in 2020. Generally, Munster believed that Apple will further see a strong stock performance in the new year particularly when compared with its FAANG companies including Facebook, Amazon, Netflix, and Alphabet that owns Google. â€œI think for 2021, the performance is going to come again from Apple. It may seem tone deaf for a company to lead FAANG for three straight years, but I think that in fact will happen. I think this has a track to $200 (per share).â€� Apple reported a net income of $57.4 billion in its last fiscal year ended September 2020.