Apple could be in for a rosy second half, two market analysts said.
Shares of the consumer technology giant hit another record high on Wednesday, its third this week, following a report that the company asked its suppliers to boost iPhone production.
Apple ended trading up more than 2% at $149.15 a share on Wednesday.
Here’s what Citigroup’s Jim Suva and Loup Ventures’ Gene Munster told CNBC on Wednesday about what they see for the stock:
Suva, Citi’s senior tech analyst, was watching the stock’s valuation:
“Can it expand … or can earnings and revenues accelerate? We actually see that the valuation is generally fair. We do not, unfortunately, expect the valuation to expand. … What we do see accelerating is the revenue and sales upside, and that’s why … consensus is too low. And with that, we think the upside in the stock’s going to be from the fundamentals of sales and earnings and cash flow and not from the market revaluing this higher-on-a-multiple perspective.”
Munster, co-founder and managing partner of Loup Ventures, predicted major upside:
“I think at the essence, the core, of this is the belief by investors that the March quarter was as good as it gets. I followed Apple for a long time. I would describe it as the best quarter that they’ve had in more than a decade. And I think the piece that’s missing … is ultimately that I think the best days are still ahead of the company, whether it’s 5G, augmented reality, what they’re going to do in health care and transportation and other additional services. And so, what does all of that mean? How does it all play together? Is this going to continue to be a growth story, which I think can power earnings higher? The Street’s looking for about $5.50 [earnings per share] for next year. I think that number is closer to $6. And when you put it all together, I think that this is a $200 stock. Let’s just call it 40% upside. I do want to point out I’ve been bullish on Apple for a long time. I made a prediction this year that Apple would be the top performing FAANG stock. And that’s probably not going to happen — Google’s up 44%, Apple’s up 9% — but if I set aside that prediction, which probably isn’t going to happen, I believe that Apple’s going to be the top performing FAANG in the back half of the year because ultimately, I think it can get a lot better and I think that this company’s best positioned of all of FAANG.”
In additional to Apple and Google parent Alphabet, the other FAANG stocks are Facebook, Amazon and Netflix.
