Analysts at the Royal Bank of Canada thinks Donald Trump could help propel Apple Inc (NASDAQ:AAPL) through the US$1tn market capitalisation mark in 2018.
RBC reckon the tech giant could turn out to be one of the biggest beneficiaries of the President’s proposed changes to the US tax system.
“While there are significant uncertainties around corporate tax reform, we think it could provide Apple EPS (earnings per share) a $4.00-4.50 tailwind and drive the stock closer to a trillion dollar market-cap scenario,” said the RBC team in a note to clients.
At the end of September, Trump and his aides proposed unveiled their new tax plans which would see the top corporate tax rate cut to 20% from 35%.
Political commentators are still unsure as to the size and significance of any tax reforms and how long it would take for them to be implemented. The proposals would also likely need a lot of compromise in order for them to be pushed through.
It’s not the first time RBC has talked up Apple’s chances of hitting US$1trn. Back in August the bank forecast a similar scenario ahead of the release of the latest iPhones given the momentum it had built up over summer.
But the launch of the iPhone 8 and iPhone X disappointed shareholders, with lukewarm reviews and battery issues putting a dampener on the phones.
With the share price easing over the past few weeks, RBC reckons now represents an “attractive entry point for investors to benefit from its ability to return to revenue and EPS growth in FY17”.
It added that there are still “multiple catalysts” such as product refreshes of its Macs and iPads which could also help to push up the stock in the coming months.
“We believe the fundamental reality remains that AAPL’s valuation is materially subpar to what we anticipate is its long-term revenue and EPS potential,” said RBC.
RBC has a price target of US$180, some way ahead of the current price of US$156.30. That’s not the highest target on Wall Street, with Drexel Hamilton tipping Apple to head up to US$208.