Apple is poised to be the first company to reach a $1 trillion market cap, RBC Capital analysts said Wednesday. Apple shares have been on a tear, with the stock gaining $56 billion in market capitalization a week after it reported better-than-expected third-quarter earnings expectations.
Amit Daryanani at RBC Capital Markets says Apple's share price would have to rise from its current level to about $192 to $195, depending on the rate of the company's stock buybacks, to reach the $1 trillion value. With Apple trading at 16 times its estimated next year's per share profits, profits would need to increase from an estimated $9 or so in 2017 to $12 in 2019, Daryanani calculates.
"Apple has potential to achieve a $1 trillion dollar market cap and even surpass that over the next 12 to 18 months," writes Daryanani. "We see upside occurring from multiple levers."
Additionally, they say Apple's strong gross-margin performance, as well as better expected sales in China next quarter should sustain the stock momentum beyond the phone launch. RBC reiterated an "outperform" rating for the stock, with a $176 price target. Analysts have a base case of $10.50 in earnings per share through the next product cycle, but their bull case has earnings totaling $12 per share or above.
The prediction comes as anticipation is building among Apple customers and investors that the next round of iPhone updates could be particularly enticing. After Apple mostly stuck with the same external design for three years in a row, the rumor mill is full of leaks that the 2017 lineup will include at least one radically resigned model.
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