Apple Inc. (NASDAQ:AAPL) could see its market valuation top US$1trn within the next 12 to 18 months, boosted by the launch of the iPhone 8 later this year.
RBC Capital analyst Amit Daryanani made the prediction as he raised the stock’s target price to US$168 from US$157 and reiterated an ‘outperform' rating.
Revenue and margins have potential to grow..
Daryanani said revenue and margins have the potential to grow as the launch of the premium-priced iPhone 8 later this year will boost average selling prices.
The pricier iPhones, including a 128 gigabyte model for at US$999 and a 256 gigabyte model for US$1,099, are expected to be released in September.
Daryanani also said Apple’s plans for US$35bn worth of share buybacks per year through fiscal year 2019 could reduce the share count by 400 million to 500 million shares, lifting earnings per share by US$1.30 to US$1.35.
Apple’s share count reduction could accelerate if it goes ahead with plans to repatriate profits held overseas, Daryanani added.
The company holds more than US$200bn offshore and plans to bring home much of the pile this year. The decision comes after US President Donald Trump vowed to offer US firms a one-off tax holiday if they return offshore cash to American soil.
Not the first on market cap rise..
Daryanani is not the first to say that Apple’s market capitalisation could reach US$1trn.
Drexel Hamilton was the first to suggest the milestone was achievable when it raised target price to US$202 a share from US$185.
Apple became the first company to see its market capitalisation surpass US$800bn on 8 May after Drexel’s remarks. Apple's market capitalisation is at US$806bn today.
Goldman Sachs also lifted its target price to US$170 from US$164bn and reiterated a ‘buy’ rating on the stock earlier this month, saying it expects Apple’s premium iPhones will lift average selling prices.