Although shares of Apple Inc. (NASDAQ:AAPL) Wednesday climbed to close at a new record high of $352.84, its valuation remains inexpensive, according to BofA Securities.

The Apple Analyst: Wamsi Mohan maintained a Buy rating on Apple and raised the price target from $340 to $390.

The Apple Thesis: Despite the appreciation in Apple’s stock, the Buy rating reflects the company’s continued penetration into its installed base, significant net cash position and continued strong capital returns, Mohan said in a Thursday note. (See his track record here.)

The analyst named seven drivers for Apple shares:

• The company is set to begin 5G iPhone production, and the stock multiple typically expands as a product cycle begins. 
• Product or hardware revenues, widely expected to remain flat, are now likely to grow 20% in 2021, driven by iPhone and wearables. 
• Other large-cap tech companies carry more regulatory risks or face tougher compares, while Apple’s compares will get easier next year. 
• Stability of cash flow. 
• Continued insourcing and services mix may lead to gross margin expansion.
• New product categories, including augmented reality glasses and health care. 
• The market multiple has expanded by two turns from pre-coronavirus levels.

AAPL Price Action: Shares of Apple were down 3.44% at $340.69 at the time of publication Thursday.

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Photo courtesy of Apple.