Apple will be the top-performing FAANG stock in 2021 despite Google’s double-digit head start, Loup Ventures’ Gene Munster says

Tim Cook, Apple CEO
Apple CEO Tim Cook attends the world premiere of Apple’s “The Morning Show” at David Geffen Hall on Monday, Oct. 28, 2019, in New York City.

  • Loup Ventures’ Gene Munster doubled down on his bet that Apple will be the top-performing FAANG stock in 2021 on Thursday.
  • Munster said Apple’s recent quarter was the best in a decade in an interview with CNBC.
  • The Loup Ventures’ managing partner added that Apple has room to grow in EVs, hardware as a service, and mixed reality.
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Apple is set to outperform its FAANG stock competition in 2021, according to Loup Ventures’ Gene Munster.

In an interview with CNBC on Thursday, Munster discussed the recent big tech earnings season and lauded Apple’s performance.

“I have a prediction that Apple’s going to be the top-performing FAANG for 2021. I’m well behind Google right now, I think they’re up 30% to 40%, Apple’s just up fractionally, but I continue to stand behind that,” Munster said.

Munster added that Apple’s recent quarter was the best he has seen in a decade and that he believes the stock will move to $200 per share.

Apple’s revenue jumped 54% to $89.6 billion in its latest quarterly report. The company also notched a profit of $23.6 billion and increased its cash dividend by 7% increase to $0.22 per share.

Management authorized an increase of $90 billion to Apple’s existing share-repurchase program as well. Analysts mostly reacted positively to the stand-out quarter.

Wedbush’s Dan Ives called the performance a “drop the mic” moment for Apple and CEO Tim Cook.

Munster said that naysayers will argue this quarter’s outstanding performance isn’t sustainable with touch comps ahead, but he believes Apple will continue to prove the bears wrong by moving into new lines of business.

To Munster’s point, Bank of America’s Wamsi Mohan maintained his “neutral” rating on Apple after the company’s blowout quarter.

Mohan told CNBC that antitrust risks, a potential corporate tax increase, and tough comparisons to previous quarters that were boosted by the work-from-home trend could drag on the stock in the coming months.

Gene Munster disagrees, noting that Apple has new opportunities in hardware as a service (renting Macs, iPhones, iPad in bundled form), mixed reality, and electric vehicles that will buoy the company moving forward.

Munster said that “transformative tech” companies like Apple will continue to make strides, despite questions about lofty valuations.

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Apple’s stock price doesn’t reflect the 12% upside offered by its growing autonomous-vehicle ambitions, UBS says

Apple CEO Tim Cook
Apple CEO Tim Cook.

Apple’s current stock price doesn’t reflect the tech giant’s budding autonomous-vehicle ambitions, according to a team of UBS equity analysts led by David Vogt.

The analysts have a price target of $142 for Apple, a roughly 12% gain from current levels. In a recent note, the analysts said their price target reflects Apple’s autonomous vehicle opportunity.

Apple has been developing autonomous vehicle technology for years but has never confirmed it’s working on a car. In a recent interview, CEO Tim Cook hinted that Apple was working on an electric-vehicle project – but said many of Apple’s ideas “never see the light of day.”

But UBS noted that there are increasing signs that Apple is working on autonomous vehicle technology. For example, Apple was recently granted a patent for VoxelNet, a technology that could be used for AVs, the analysts said.

“Although Apple has not made a formal announcement yet, we believe the series of patents granted around AV further demonstrates Apple is allocating significant resources to projects that have ‘optionality’ but not reflected in the shares,” they said.

UBS also noted that Apple’s Voxel patent file makes a brief mention that the technology involves processors that simulate a vehicle making a turn, a further hint that the company is diving into self-driving cars.

“Although the application could have a myriad of uses, we find the use of the word ‘vehicle’ in the patent claim along with prior research published by Apple as important clues around the company’s commercial intentions,” said UBS.

Apple rose as much as 1.6% on Thursday, though the stock is down roughly 2.5% year-to-date as investors have taken profits from mega-cap technology names that dominated in 2020.

“Apple currently trades at 28x NTM P/E, in-line with its trailing one year average,” said UBS. “However, we believe a sum-of-the-parts (SOTP) framework is more appropriate going forward given auto optionality. As such, our price target of $142 reflects not only a value for Apple’s “Core” of ~$128 but also an evenly-weighted probability value of Apple’s auto opportunity ($14/share) in our SOTP analysis.”

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