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Toni Sacconaghi Defends $1 Trillion Apple Valuation Call

Toni Sacconaghi Defends $1 Trillion Apple Valuation Call
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Bernstein's Toni Sacconaghi laid out the case earlier this week for a scenario in which Apple Inc. (NASDAQ: AAPL) could see its stock exceed a $1 trillion valuation.

Sacconaghi was a guest on "Bloomberg GO" Thursday to defend his uber-bullish call at a time when Apple's stock has lost 10 percent since the start of 2016 and nearly 30 percent over the past year.

Sacconaghi noted that Apple's current valuation stands at half a trillion dollars, while also trading at a "very low" multiple of 8x earnings (excluding cash).

Related Link: Apple-As-A-Service: The Fruit's Recipe For $1 Trillion Market Cap

"Our perspective is, the challenge for Apple is that it sells hardware products," Sacconaghi argued. "And, the challenge with hardware products is that ultimately over time people keep those products for longer and prices go down."

"That makes hardware a very challenging business," he added.

The analyst suggested Apple should begin selling its products as a service. He added that consumers could create a "family bundle of Apple products" for a monthly service fee.

Ultimately, Apple would continue adding services to increase the number of offerings in the bundle package, including a future over-the-top television service.

The analyst was then asked to quantify the level of demand for a new bundle of Apple products. He answered that if Apple could create a bundle package that offers superior value versus buying each service as a standalone product.

Sacconaghi also suggested a bundle of Apple products would create a "predictable" revenue stream - something Wall Street "loves."

Latest Ratings for AAPL

Feb 2018Raymond JamesReinstatesMarket Perform
Feb 2018Goldman SachsInitiates Coverage OnNeutral
Feb 2018Hilliard LyonsUpgradesLong-Term BuyBuy

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