Analysts firm FBR & Co. said that Apple Inc. could become the first $1 trillion company. The analyst company said that the company will outperform the market and have given it a price tag of $185, the highest among Wall Street analysts.
James Moore and Dan Ives of FBR have given various reasons for their strong bullish opinion of Apple. One of the reasons given by them is because of the Crown jewel, which will drive the Apple market cap to $1 trillion. They also said that the since mobile phones hardware is becoming available, the software business will contribute to Apple’s revenue.
They said that the iphone company will look to exploit the high profit margin of more than 90 percent presented by its service business. There is high growth opportunity, and service division can make 32 percent of company’s gross profit in 2017 in contrast with the expected 12 percent for the current financial year.
They said that the full potential of the Apple’s services will be realized in future as they are in initial stages.
They viewed wearables as a potential segment; they consider it to be $20 billion opportunity to Apple. They also said that the company’s software and other services will act as growth drivers.
Tim Seymour, an analyst with Triogem Asset Management, has a different opinion and said that he disagreed with the estimated price target of $185 for Apple. He said that the company’s prospects looks promising but the growth drivers mentioned by FBR analysts will not push Apple to $180 mark.
Seymour said, “I do believe these are things that they are transitioning into, and they provide a buffer for the stock, they help sentiment. I just don’t think that gets you to $180—and I love Apple.”
Apple’s share closed at $126.17 on Thursday, this will amount the market cap of $737.85 billion.