Technology giant Apple’s stock, which closed 1.61 per cent higher at $139.07 on Friday, could be worth $200 per share in the next couple of years, according to US-based Loup Ventures.
Its bullish prediction is based on the assumption that the iPhone maker will achieve a double-digit growth in revenues in 2021, coupled with an accelerated digital transformation globally that will continue to be a “tailwind for Apple's growth for the next several years”.
The venture capital firm predicted that Apple will achieve revenue growth of 19 per cent year-on-year in the holiday quarter, ended on December 30, beating an average of Wall Street analysts' estimate of 12 per cent. It expects Apple to earn record quarterly revenue of $109.5 billion, compared to the average estimate of $102.8bn.
“We expect results will continue to instill confidence … the company will grow revenue [at] around 16 per cent in financial year 2021, compared to 6 per cent in financial year 2020,” Gene Munster, managing partner at Loup Ventures, said.
“Putting it together, we believe shares of Apple will approach $200 … 44 per cent upside from current levels … over the next couple years,” he added.
The iPhone manufacturer, whose shares have jumped around 75 per cent over the last 12 months and by 7.5 per cent since the start of this year, is scheduled to announce results for the three months to December 30 on Wednesday.
“While [average] financial year 2021 revenue growth estimates of close to 15 per cent are in line with our expectation, we believe consensus estimates for financial year 2022 of 5 per cent growth are too low … we expect those estimates to inch higher throughout the fiscal 2021,” David Stokman, an analyst at Loup Ventures, said.
Coronavirus-induced lockdowns mean many people are continuing to work and study from home. This could provide a “continued tailwind for the iPad and Mac businesses” that contribute about 25 per cent of Apple's total revenue.
These two segments can grow at more than 10 per cent this year and in 2022, compared to flat growth over the past few years, Mr Munster said.
The later launch of Apple's iPhone – the 5G-enabled iPhone 12 – last year due to supply chain disruptions could also feed into earnings for the December quarter, Loup Ventures said.
It expects the proportion of revenue from the phone's launch to reach 59 per cent, compared to the usual level of about 50 per cent of sales. This would equate to about $64.9bn, above the average estimate of $59.4bn.
“We are well ahead of the Street on iPhone for December … given our belief that nearly $8bn in iPhone revenue was pushed from the September quarter,” the company said.
Last month, Japanese newspaper Nikkei reported that Apple plans to produce up to 96 million iPhones in the first half of 2021, a 30 per cent year-on-year increase, after demand for its first 5G handsets surged amid the Covid-19 pandemic.
This, along with reports that Apple is planning to produce its first electric car in 2024 and is in early-stage talks with Hyundai, has buoyed the company's shares.