Apple Investors Eye $1tn Valuation Target
CALIFORNIA (Financial Times) - Apple’s valuation has reached heights markets have never seen before, at least in nominal terms, with the iPhone maker’s market capitalization eclipsing $770bn.
Now worth more than the entire S&P 600 small-cap index, or two Berkshire Hathaways, the question for some investors is whether the Cupertino-based technology behemoth can even surpass the $1tn mark.
Other technology groups, such as Microsoft and IBM, have enjoyed rocketing valuations only to fall to earth. Yet Apple bulls have thus far been in the ascendant, sending its shares to a new all-time high this week.
Analysts, too, have taken the view that Apple will if anything go higher, lifting price targets at a heady clip. Goldman Sachs increased its target to $145 a share last week — worth $845bn based on current share counts. The highest target, at $165 from First Shanghai Securities, would see Apple’s market valuation rise to $960bn.
Accelerating iPhone sales, rising earnings forecasts, the largest buyback and dividend program in the US and the prospect of new products — including a car — have propelled Apple’s shares up 19 per cent this year, adding more than $110bn to its market valuation.
By contrast, valuations for the next 10 largest businesses on the S&P 500 have dropped by $67bn this year, including $10bn-plus haircuts to ExxonMobil, Microsoft, Procter & Gamble and Johnson & Johnson.
A $1tn valuation is "possible in the next couple of years, and the reason I think it has this potential is really because the multiple investors are willing to pay for [Apple] is expanding,” says James Gautrey, a Schroders portfolio manager.
Other technology groups, such as Microsoft and IBM, have enjoyed rocketing valuations only to fall to earth. Yet Apple bulls have thus far been in the ascendant, sending its shares to a new all-time high this week.
Analysts, too, have taken the view that Apple will if anything go higher, lifting price targets at a heady clip. Goldman Sachs increased its target to $145 a share last week — worth $845bn based on current share counts. The highest target, at $165 from First Shanghai Securities, would see Apple’s market valuation rise to $960bn.
Accelerating iPhone sales, rising earnings forecasts, the largest buyback and dividend program in the US and the prospect of new products — including a car — have propelled Apple’s shares up 19 per cent this year, adding more than $110bn to its market valuation.
By contrast, valuations for the next 10 largest businesses on the S&P 500 have dropped by $67bn this year, including $10bn-plus haircuts to ExxonMobil, Microsoft, Procter & Gamble and Johnson & Johnson.
A $1tn valuation is "possible in the next couple of years, and the reason I think it has this potential is really because the multiple investors are willing to pay for [Apple] is expanding,” says James Gautrey, a Schroders portfolio manager.