Morgan Stanley Analyst Says Apple Could Add $1 Trillion To Its Market Cap

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In January, Apple’s market capitalization hit $3 trillion for the first time in the company’s history. However, the performance has been discouraging since the January figures due to a  combination of several factors. The consumer economy has fallen drastically while tech-stock valuations are spiraling downward.

But an analyst with Stanley Morgan, Erik Woodring, has predicted that the company will get back to its January levels sooner rather than later.

Apple’s Market Cap Could Increase By $1 Trillion

In a research note, he stated that the market cap for Apple could surge by $1 trillion. Woodring explained that the firm is gradually shifting its focus from maximizing unit growth to increasing its income from its installed base. He thinks with the new approach, investors will be looking at Apple from the point of a subscription-driven business, rather than just a hardware vendor.

Earlier this year, investors were betting that consumers will increase their demand for MacBooks, iPhones, and other services like Apple Music and Apple TV. But since January, Apple’s stock price has plunged by more than 16%, resulting in a loss of almost $500 billion in market cap.

Apple To Hit A Valuation Of Over $200 Per Share

Woodring stated that although Apple is seen as a traditional technology hardware platform. But investors will be shifting focus towards a more “lifetime value (LTV) based valuation approach.

He added that Apple could reach a long-term valuation of upward of $200 per share as the company shifts to sustained installed base mode.

 

The analysts argued that the tech giant is already meeting most of the five major characteristics of a successful subscription business. Additionally, Apple is still trading at a major discount to several subscription models, which counts as an advantage for the firm.

This shows that the market doesn’t underwrite long-term cash flow stability as is the case with true subscription businesses. However, the analysts were quick to point out that Apple is yet to meet one subscription model characteristics, which is widespread subscription pricing.

Generally, Apple has been rated by Morgan Stanley as “overweight” with a price target of $180. This implies a 2.7% drop compared to its median price target of $185.

About Ali Raza PRO INVESTOR

Ali is a professional journalist with experience in Web3 journalism and marketing. Ali holds a Master's degree in Finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of leading cryptocurrency publications including Capital.com, CryptoSlate, Securities.io, Invezz.com, Business2Community, BeinCrypto, and more.