Market Overview

How Much Upside Does Apple's Stock Have? Gene Munster Says 70%

How Much Upside Does Apple's Stock Have? Gene Munster Says 70%

Former research analyst turned venture capitalist Gene Munster has a bold prediction: Apple Inc. (NASDAQ: AAPL) will be the best-performing FANG stock in 2019 and gain more than 70 percent in value over the next two years to trade near $350 per share.

What Happened

The case for appreciation in Apple's stock over the coming years can be made based on the growth in services, Munster told CNBC during a "Trading Nation" segment.

The services story has been important to Apple over the past few years, but it is "even more important now" since the iPhone story has seen its "sizzle" slow down, Munster said. 

Apple has several initiatives in the pipeline to support its services business, including streaming video, an arcade and a gaming service, he said. These new lines of business could make up for flat or slightly growing iPhone unit metrics and would have a "significant" impact on Apple's stock, Munster said. 

Why It's Important

Shares of Apple are trading at around 15 times next year's earnings, which is a notable discount to consumer staple companies like Clorox Co (NYSE: CLX) in the low-20s, the Loup Ventures managing partner said. SaaS companies show an even higher valuation gap, as the group trades in the 40-times range, he said. 

What's Next

The math behind $350 per share yields a future valuation of approximately $1.5 trillion. Over the coming years, investors will re-evaluate how they look at Apple, as the company is more of a consumer staple, Munster said. 

"Tech can be a consumer staple," he said.

"While there are fluctuations in the businesses like Clorox and Coca-Cola and businesses like the iPhone, I think the same underlying message is true. We cannot live without Apple. We cannot live without those other staples. "

Related Links:

Apple Q2 Earnings Preview: What To Expect

iPhone Comeback? Morgan Stanley Talks Apple's Chinese Growth

Photo by Daniel Lu/Wikimedia. 

Posted-In: Apple Services CNBC Gene Munster Loup Ventures Trading NationMedia Best of Benzinga


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