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Apple first US company to reach $800 billion market cap

by on10 May 2017


Shares up 50 percent since US election, 33 percent this year

On Monday, Apple became the first company in US history to reach a historic $800 billion market capitalization, just over two years after it crossed the previous $700 billion threshold. Despite our longstanding criticisms, it remains the world’s most valuable publicly traded company after earnings.

The scene on Wall Street yesterday was one marked by a 4.05 percent increase in Apple shares as investors weighed the possibility that the fruit-themed toymaker could become the first in US history to be valued over $800 billion. In the afternoon, the company’s shares hit a high of $153.70 and dipped back down to $153 before closing, up 2.7 percent. Since the beginning of 2017, Apple’s shares have risen 29 percent, leading some industry watchers to believe that the company could be worth $1 trillion within the next year.

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Source: Markets Insider

Company may reach $1.05 trillion based on 35 percent price target

Brian White, an analyst with Drexel Hamilton, gave the company a price target of $202, or an increase of around 35 percent from its $153.99 close on Tuesday. If the stock eventually climbed to this target, it would give Apple a market value of $1.05 trillion based on its current 5.02 billion share count. This forecast is not too uncommon, however, considering that the company has managed to climb a notable 60 percent since Q2 2016. Among the thirty-three Wall Street analysts who cover Apple stocks, his target ranked the highest, with an average target set at $159 and the lowest being $120.

Currently, the S&P 500 has been trading stocks at 16 times the level of 2018 estimated earnings. White says his 12-month price target is based on applying a 16 price-to-earnings ratio to his $10.49 earnings per share estimate, plus adding the company’s $12.9 cash per share.

White also says that upcoming products like the iPhone 8 have the potential to unlock more “upside” for investors. Back in December, his brokerage firm issued a research note to clients saying, “we believe Apple remains one of the most underappreciated stocks in the world.

"Apple has proven its resilience through its unique ability to develop hardware, software and services that work seamlessly together. "We believe this positions Apple very well to capitalize on the trend toward more 'things' becoming a computer."

During a quarterly conference call last July, CEO Tim Cook said he expects the company’s services sector, which continues to grow despite flat iPhone sales, will become the size of a Fortune 100 company at some time in 2017. Cook attributed the success to an active customer base of device owners, with particularly strong demand coming from its Apple Watch and expensive AirPods.

Warren Buffett praises Apple's stock buyback program

In a recent interview, Warren Buffett, CEO of Berkshire Hathaway and the world’s second richest billionaire behind Bill Gates, said he appreciates what Apple is doing with its stock buyback program for investors. Back in February, Apple began paying shareholders $3.1 billion in dividends on outstanding shares for anyone who purchased stock before February 9th. This was the eleventh dividend to occur since the company issued a 7-for-1 stock split in early 2014. Buybacks have the effect of increasing scarcity, and therefore the overall value, of Apple’s stock by taking shares off the market. Some say this increases the importance of its earnings per share metrics.

“I don’t own it because of what I think the earnings are going to be the next three months or six months,” he told CNBC. “It’s very hard to figure out how much people delay their buying of iPhones because of the launch of a new one in six months.”

Last modified on 10 May 2017
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