Gene Munster, a veteran Wall Street analyst who had rightly predicted Apple’s run to $2 trillion market cap back in January 2020, believes that the Steve Jobs’ company has a path to $3 trillion as well. Munster had covered Apple for a long time as an analyst at the investment bank Piper Jaffray. He told CNBC recently that the iPhone maker can realistically reach $200 per share. This would push Apple’s market cap beyond $3 trillion from the current $2.22 trillion market cap with its stock trading around $132 per share on Friday. Apple became the first publicly traded US firm to hit the $2 trillion market cap in August 2020.
Munster, who later co-founded venture capital firm Loup Ventures, said that his belief was based on Apple trading at a price-to-earnings ratio, or multiple, of 35 for 2022 earnings estimates. The Price-to-earnings ratio refers to the dollar amount an investor can look at to invest in a firm in order to get one dollar of that company’s earnings. In a way, it indicates how much an investor may pay per dollar of earnings and hence is referred to as the price multiple. “It’s a year out there but I’m fast-forwarding the conversation to the middle and back half of next year, and we’ll be talking about 2022 at that point. If the market can sustain these 35 multiples — you know, we’re not talking about an Amazon-like multiple here — I think that that path is there,” he added.
Apple’s current price-to-earnings ratio is 40.51 after its stock soared around 81 per cent in 2020. Generally, Munster believed that Apple will further see a strong stock performance in the new year particularly when compared with its FAANG companies including Facebook, Amazon, Netflix, and Alphabet that owns Google. “I think for 2021, the performance is going to come again from Apple. It may seem tone deaf for a company to lead FAANG for three straight years, but I think that in fact will happen. I think this has a track to $200 (per share).” Apple reported a net income of $57.4 billion in its last fiscal year ended September 2020.