Apple Inc AAPL 0.12%, the world’s most valuable public company, has a staggering $800 billion market cap. Yet despite its incredible size, Apple could become the world’s first trillion dollar company within a year’s time.
5 Reasons
There are near-term drivers for Apple that could send its market cap above the $1 trillion mark within the next 12-18 months, RBC Capital analyst Amit Daryanani said:
- Higher revenue growth due to an uptick in blended iPhone ASP to above $800.
- Up to a 0.3 percent gross margin expansion due to growing services revenue.
- A 1.0 percent uptick in operating margins due to SG&A controls.
- Buyback tailwinds leading to EPS growth in the low teens.
- A repatriation tax holiday.
“In aggregate, we see a scenario where in FY19 AAPL sustains $12+ EPS and, assuming the valuation frameworks remain stable/improves, it should get AAPL stock toward $192-195/sh, which would equate to market cap > $1.0 trillion,” Daryanani said.
In fact, Apple would only need to sustain mid-single-digit revenue growth through fiscal 2019 to make it to the $1 trillion mark, he said.
Apple should be able to deliver at least $60 billion in free cash flow annually and $35 billion in buybacks annually, Daryanani said. Those buyback levels could get a major boost if Apple is given the opportunity to repatriate its massive overseas cash hoard.
Rating And Valuation
RBC maintains…
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