Tech investor Gene Munster told CNBC on Thursday that he sees a reasonable path for Apple to reach market capitalization of $ 3 trillion in the future.
The iPhone maker was the first U.S. commercial company to reach a market cap of $ 2 trillion in August – a milestone seen in Munster in January, when it managed to get the stock trade 50% higher. On Thursday, with its stock at around $ 133 per share, Apple was valued at nearly $ 2.3 trillion.
Munster, who covered Apple as a longtime analyst at investment bank Piper Jaffray, told “Squawk Box” that he believes the California – based company can reach up to $ 200 per share. That would increase its market potential by over $ 3 trillion.
“It has to be anchored in earnings. That’s the powerful piece of Apple’s story,” said Munster, co-founder of venture capital firm Loup Ventures. He said his forecast is based on Apple trading at a price-to-earnings ratio, or multiples, of 35 for 2022 employment estimates.
“There’s a year out there but I’m pushing the conversation to the middle and back of next year, and we’ll be talking about 2022 at that point. If the market can do those 35 multiples keep up – you know, we’re not talking about a lot like Amazon here – I think that way, “Munster said.
Apple’s current price-to-earnings ratio is almost 41, after the stock went up about 81% this year. Amazon, which has seen its stock rise around 76% this year, is trading at around 95 multiples.
One catalyst that could lead Apple higher is the increased uptake of remote work triggered by the coronavirus pandemic, Munster said.
“This is thought to be a play on an iPhone, a 5G game. That’s fine. That will affect the numbers in a positive way, but this acceleration of digital transformation, I think. think it’s powerful, “Munster said. “People who work from anywhere are going to go up in the next 12 to 24 months, buying more Macs, iPads, services.”
Munster also voiced its view that many of Apple could withstand further expansion while investors reconsider the company, which has been pushing for more revenue. generate revenue from services to increase hardware sales.
For its part, Munster said it believes Apple could accelerate its hardware business to a service, such as buying a Mac on a membership. “We think that’s coming, and more talk about autos is a huge opportunity for multi-Apple,” Munster said, citing reports of Apple potentially making an electric car in a few years.
Overall, he said he believes Apple will continue to have strong stock performance in 2021, especially compared to the so-called FAANG brothers. In addition to Apple, the group of tech companies also includes Amazon, Facebook, Google-parent Alphabet and Netflix.
“We think there will be another break of FAANG,” Munster said, with Facebook and Netflix going down on Apple and Amazon. “I think for 2021, the performance is going to come again from Apple. It may seem deafening for a company to run FAANG for three straight years, but I think that will certainly happen. I think this has a way to $ 200. [per share]. “