Apple Inc’s AAPL best days are yet to come, as per Loup Ventures analyst Gene Munster.
What Happened: The analyst said in a note Sunday that the previous $200 target laid out by him was “too conservative.” Munster said that in FY 23, Apple will earn $7 yields, which is a $250 share price — a 38% markup from the current levels.
Munster’s optimism is riding on two new product categories — metaverse and autonomy.
“AR or MR glasses are a logical Apple contribution to the metaverse where we will play and work in a more immersive digital worlds,” wrote Munster.
On autonomy, Munster took a more cautious tone, saying the car was likely more than five years away. However, he did not shy away from making a case for the value the new opportunity could add.
“If you assume Apple can capture 10% of the auto market, they have just under 20% of the phone market today, at $60k per car, equals $540B annual revenue business.”
The analyst said he used the “same logic” he used when Apple crossed the $1 trillion and $2 trillion valuations.
“I believe Apple’s best days are yet to come, based on the current business and future business Apple will likely add.”
“Given the size of the new addressable markets investors will consider, I see an increased multiple to 35x as reasonable,” the analyst wrote.
Munster pointed out Apple’s valuation at 26x 2023 earnings. In comparison, Munster highlighted Facebook Inc’s FB 19x, Alphabet Inc’s GOOGL GOOG 23x, and Amazon.com, Inc’s AMZN 57x valuations.
See Also: How To Buy Apple (AAPL) Shares
Why It Matters: A $200 billion rise has been seen in Apple’s market capitalization since the Apple car rumors surfaced and gained credibility in November, Munster noted.
However, the Tim Cook-led company’s “biggest opportunities” like automotive, metaverse, augmented reality and mixed reality have not yet been fully factored in shares.
“Auto could be worth $2 trillion plus to Apple’s market cap long term.”
Notably, Munster’s optimistic note comes at a time when over the last month the iPhone maker’s shares have shot up 21% to nearly $179.50. If the stock rises to $186, Apple would become the world’s first $3 trillion company.
Wedbush analyst Daniel Ives said the “linchpin” to Apple’s valuation rerating is its services business, which is in the middle of its strongest product cycle in over a decade.
Price Action: On Friday, Apple shares closed 2.8% higher at $179.45 in the regular session and rose 0.22% in the after-hours session.
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