Apple on course to hit a $2 trillion valuation

The tech giant has seen its share price rebound after tumbling 25% the Covid-19 outbreak, with the stock on course to exceed analysts price targets for 2020 and on a path to be the first company to hit a $2 trillion valuation.

Two years ago, Apple became the first company to reach a $1 trillion market valuation. This week, several analysts have begun eyeing the next milestone, with the company on course to break above $2 trillion.

In a note to investors earlier this week, Evercore ISI analyst Amit Daryanani expressed his optimism for Apple stock and provided a blueprint for how the company could drive its share price higher and reach its next landmark valuation.

In terms of timeline, the Evercore analyst believes the stock can reach a $2 trillion market cap over the course of the next four years, implying a 13% - 17% annual appreciation in share price.

Daryanani’s outlook is based on the company’s core business growing year-on-year, with the analyst predicting that Apple could see its earnings per share (EPS) hitting $23 by September 2024 – almost double his EPS estimate of $12.72 for this year.

Apple opened at $323.34 per share on Wednesday.

Evercore lifts target price for Apple stock

Due to the investment bank’s upbeat outlook, Evercore reiterated its ‘outperform’ rating for the stock and lifted its target price for Apple from $345 to $360 per share, implying a potential upside of 11%.

‘Apple continues to offer the best risk/reward in large-cap tech and long-term investors should use any weakness to add to positions,’ Daryanani said in the note.

Apple is already closing in on analysts’ median price target of $323.79 per share, with the stock on course to break above that level this week.

Double-digit growth expected from Apple services and wearables

Evercore is particularly excited about the growth prospects of Apple’s services and wearables division, with the investment bank forecasting double-digit growth for both units.

Daryanani said that sales from the company’s wearable technology, such as its Apple Watch and AirPod Pro headphones, could generate revenues of over $60 billion in the years ahead, with its services division capable of generating $100 billion in sales over the period.

The analyst also had good news for shareholders, with him predicting that Apple will continue to buyback shares to reduce its share count by around 1 billion over the next four years, which would also help it in achieving its $2 trillion valuation.

How much does it cost to buy US shares with IG?

There are three ways to ‘buy’ US shares with IG: spread betting, trading CFDs or buying physical shares. How much it costs will depend on which method you choose. The table below illustrates how the costs to get exposure to $12,750 of Tesla stock, which is equivalent to 17 shares (quoted at $750 a share, at a GBP/USD rate of 1.305).

Remember, spread bets and CFDs are derivatives, which come with higher risk and reward than investing.

Cost to get exposure to Tesla stock

Spread betting CFD trading Share dealing
Action Buy $0.13 per point Buy 17 share CFDs Buy 17 shares
Capital required to open $2000 $2550 $12,750
Total fees $2.16 $24.24 $97.70

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Note: The above is accurate as of 10 March 2020, and amounts do not include overnight funding charges and taxes.

Spread bets are not subject to tax. CFDs are free from stamp duty, but subject to capital gains tax. Share dealing is subject to both stamp duty and capital gains tax.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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