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Apple: The World’s Most Underappreciated Stock?

Apple

Apples shares on a tear today, with one analyst putting a $235 price target on the company, implying a 36-percent upside and a $1.19-trillion valuation.

But is it realistic? And is Apple really the world’s most underappreciated stocks?

It would be a huge milestone for Apple to hit a valuation of $1.19 trillion. It’s at the top in the running to be the first public company to hit the trillion-dollar mark.

Wall Street analyst Brian White—known for being a die-hard Apple bull—resurfaced with a bang yesterday, putting a buy rating on Apple and a $235 share price target, telling clients that Monness Crespi views Apple as “one of the most underappreciated stocks in the world with a valuation that remains depressed”.

In a note to clients, White said that Monness Crespi expects Apple to cross the $1 trillion market capitalization milestone over the next 12 months.

Apple shares responded accordingly, jumping as much as 2.19 percent early Thursday, before paring some of those gains in the afternoon, but still up over a percentage point as of 2:06pm EST.

(Click to enlarge)

The rationale for this ambitious forecast?

According to White, Apple could raise its shareholder-return program to $400 billion or $500 billion through 2019, up from $300 billion previously.

Also, by fiscal 2020 the analyst sees the company’s Services segment sustaining more and more attractive gains, on track to double fiscal 2016 revenue of $24.34 billion in sales. 

Currently, Apple has a nearly $884 billion market cap right now, so getting to the $1 trillion market would require a 20-percent boost in valuation.

Much will depend on the new iPhone X. Later this year, possibly in the fall, Apple plans to release three new smartphones: the largest iPhone ever, an upgraded iPhone X and a less expensive model.

But Apple isn’t the only company hoping to make trillion-dollar history here. Amazon, Microsoft and Alphabet are also on track.

With a market cap of just over $721 million, Alphabet is hoping to narrow the gap further. In its most recent quarter, revenue increased 24 percent to $27.8 billion and earnings per share jumped 32 percent.  Related: The Tech Breakthrough That Will Render Wi-Fi Obsolete

The biggest recent push toward $1 trillion has come from online retail behemoth Amazon, whose stock is up 35 percent this year and 85 percent over the past 12 months.

(Click to enlarge)

Amazon has gotten off to the fastest start in 2018 with the stock already up 35 percent this year, with surging 85 percent over the past 12 months. and 513 percent in the last five years. Even though it would require 46 percent gain reach $1 trillion, with a revenue growth rate above 25 percent, the company is likely to get there by next year.

In late March, Amazon’s market cap surpassed Alphabet's market cap for the first time ever but as of now its market cap is $700 billion. However, Amazon stock sank 5 percent and lost $60 billion in market value earlier this month, after US President Donald Trump attacked the company on Twitter and said he “wants to go after Amazon.”

Related: China Poised To Overtake U.S. In Artificial Intelligence Race

It’s hoping to win some of that back right now with an estimated $1-billion deal—the biggest acquisition in its history—for Ring’s video doorbell. And it should be big because Amazon just slashed the price of the wifi doorbell from $150 to $100 for a sale that started today.

And the trillion-dollar playing field gets a bit more crowded with the recently joining of Microsoft, whose stock hit an all-time high and pushed its market capitalization to $720 billion and treading on Alphabet’s territory.

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Some analysts on Wall Street have recently predicted that the company’s market cap could reach $1 trillion by 2020 or even sooner. But it’s not likely to beat Apple to the trillion-dollar punch.

By Tom Kool for Safehaven.com

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