5 Reasons Apple Could Make It To A Trillion-Dollar Market Cap In One Year's Time

Apple Inc AAPL, the world’s most valuable public company, has a staggering $800 billion market cap. Yet despite its incredible size, Apple could become the world’s first trillion dollar company within a year’s time.

5 Reasons

There are near-term drivers for Apple that could send its market cap above the $1 trillion mark within the next 12-18 months, RBC Capital analyst Amit Daryanani said:

1. Higher revenue growth due to an uptick in blended iPhone ASP to above $800.
2. Up to a 0.3 percent gross margin expansion due to growing services revenue.
3. A 1.0 percent uptick in operating margins due to SG&A controls.
4. Buyback tailwinds leading to EPS growth in the low teens.
5. A repatriation tax holiday.

“In aggregate, we see a scenario where in FY19 AAPL sustains $12+ EPS and, assuming the valuation frameworks remain stable/improves, it should get AAPL stock toward $192-195/sh, which would equate to market cap > $1.0 trillion,” Daryanani said.

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In fact, Apple would only need to sustain mid-single-digit revenue growth through fiscal 2019 to make it to the $1 trillion mark, he said.

Apple should be able to deliver at least $60 billion in free cash flow annually and $35 billion in buybacks annually, Daryanani said. Those buyback levels could get a major boost if Apple is given the opportunity to repatriate its massive overseas cash hoard.

Rating And Valuation

RBC maintains an Outperform rating or Apple and has a $168 price target for the stock. The firm’s upside scenario of $195 suggests roughly 30 percent upside from Apple’s current share price, while its downside scenario of $105 represents roughly 30 percent downside as well.