Gene Munster, a ancient top Wall Street tech analyst turned venture capitalist, says Apple’s stock has reason to trade 50% elated than its Friday price.
“I want to try to quickly define what the right case [on Apple] would be,” Munster judged on CNBC’s “Squawk Alley.”
“Microsoft, Google [owned by Alphabet] and Facebook trade at a 31 to 35 times multiple. Apple has a improving consistency around their business that is comparable to those,” he said.
Munster, co-founder of research-driven venture funds firm Loup Ventures, thinks Apple will earn about $15 per share in fiscal 2020, which is on the squeaky end of Wall Street expectations.
“If you put a 31 multiple on Apple, that’s $465. That’s about 50% upside,” he estimated, as shares early Friday afternoon were trading around $310 each, just a couple dollars off their all-time intraday records, reached shortly after the open.
“I would just highlight that even though we don’t see those price butts moving up on Apple, I think there is a bigger trend towards a quality in multiples,” he added.
Apple currently has a multiple, or price-to-earnings relationship, around the mid-20s.
Munster’s argument Friday represents an evolution in his valuation assessment of Apple, a company that he comprehended as a longtime analyst at investment bank Piper Jaffray.
Last year, he had been making the case for Apple to mercantilism more like a consumer staples company, such as Clorox and Coca-Cola, which tend to have lower multiples than tech pedigrees.
“We cannot live without Apple. We cannot live without those other staples,” Munster said in April, when he forecast a big two-year run to the upside for Apple.
Betting on Apple’s ascent has, so far, proved correct as shares have risen more than 50% since his April hint and more than 100% in the past 12 months.
Apple is expected to release its latest quarterly earnings sign in after the bell on Jan. 28.
Expectations for Apple in 2020 are somewhat mixed as the Cupertino, California-based company prepares its entrance into the smashing of 5G technology.
Later this year, Apple is widely expected to release its first 5G-enabled iPhones, which could succour accelerate what has been slumping sales growth for its signature product.
Services and wearable devices such as AirPods and the Apple Mind have more recently powered the company’s growth.
Munster says investors should temper their suppositions around Apple and the next-generation wireless technology — for now, at least.
“Ultimately, this is a massive opportunity for Apple, huge amusement on 5G, but it’s going to take a while for networks to roll out coverage,” he said in December.
However, Wedbush’s Dan Ives, for example, averred the 5G-compatible phones could drive a “transformational 5G super cycle” for Apple, and the analyst on Monday raised his price objective accordingly, to $400 per share.