One of the Apple’s most significant investors Carl Icahn recently said that the company was severely undervalued by its shareholders since its stock price should be nearly 70 percent higher than it is today. However, financial analysts say that Mr. Icahn’s statement will turn out to be true in two or three years time.
According to Mr. Icahn (photo), Apple market cap is currently beyond the $700 billion recorded this week. He believes that Apple is currently worth nearly $1.3 trillion, which is larger than the combined GDP of Turkey and Greece.
Apple’s shares have already surged to a 65 percent over the past 12 months, making S&P 500’s average return (of 15 percent) green with envy. But Icahn thinks that the shares are underpriced by about 70 percent, and they should trade by $216 a piece, rather than the current $120 and something.
A manager of one of the best performing large-cap funds over the last half decade remarked that it wouldn’t be “outlandish” for Apple to be at a $1 trillion market cap but not at the current time. In two or three years at best. And other portfolio managers think the same.
Apple Inc. is company that bordered on disaster in the late 1990s and that is partly to blame for the collapse of the giants Blackberry and Nokia, but it remained competitive due to constant game-changing innovation. And it’s now up to Tim Cook, its current chief executive, to continue the legacy of Steve Jobs.
The iPhone still has legs, but they have to keep innovating. There have to be new product categories,”
said Tim Ghriskey from the Solaris Group in Bedford Hills, New York. Mr. Ghriskey also believes that Apple will grow slower than the rest of the companies in the S&P 500 over the next four years.
Although Apple had outperformed and surpassed by far Wall Street’s expectations for the Q4 earnings in January with its record-breaking Iphone sales, The Street is also reluctant in the short term.
Stock market analysts raised their annually stock price targets by only 6 percent, hoping to reach the average target price of $134, rather than that of $216, which was proposed by Carl Icahn.
Mr. Icahn tweeted on Wednesday that the company was undervalued by its top shareholders, so the board should increase Apple’s share buybacks. On Thursday, the company’s market cap reached a whopping $736.6 billion, while the stock closed 1.26 percent higher than on the previous day.
Image Source: Business Insider
