Just days after crossing the $2 trillion level for market value for the first time in history, Apple shares are set for a fresh record high of more than $500 per share heading into the Monday session as the world's most valuable tech company extends its year-to-date gain past 70%.
"Over the last four quarters Apple has generated 6% year-on-year revenue growth, 12% year-on-year earnings growth, and 24% year-on-year free cash flow growth, despite iPhone revenue declining 1% year-on-year in the same period," said Morgan Stanley analyst Katy Huberty, who carries an overweight rating with a $520 price target for the stock. "In our eyes, these results underscore the strength of Apple's broad ecosystem of products and services,a change from past years where Apple was more reliant on the success of the iPhone to drive growth."
"These results also demonstrate the increasing engagement and stickiness of Apple's customer base,and as a result, we increasingly believe that Apple should be valued like a technology or consumer platform, rather than a more cyclical hardware company," she added.
Apple shares were marked 3.5% higher in early trading Monday to change hands $515.05 each, a move that would extend the stock's three month gain to around 61.5% and value the Cupertino, California-based company at around $2.2 trillion.
Apple now accounts for around 7% of the S&P 500's total market capitalization, and is worth more than the combined value of the benchmark's 200 smallest companies, according to Reuters data and reporting.
The stock's impact on the Dow Jones Industrial Average, however, is set to wane next week after the group announced a four-for-one stock split that will take effect on August 31.
Monday's pre-market gain, for examples, adds around 92 points to the Dow, based on its current share price in pre-market trading. A similar gain at $100.80 per share -- when the split becomes effective on August 31 -- would add only 23 points to the price-weighted average.
Apple shares passed the $400 mark on July 31 after it posted blowout third quarter earnings in the face of pandemic-triggered store closures and supply chain disruptions.
Apple said earnings for the three months ending in June, the group's fiscal third quarter, rose 25.9% from the same period last year to $2.58 per share, well ahead of the $2.05 per share Street consensus forecast. Group revenues rose 13.4% to a Street-beating $59.7 billion, Apple said, with gains in every geographical region and across all product line.
iPhone revenues rose 2% from last year to a forecast-beating $26.4 billion, despite the COVID-19 headwinds, thanks in part to a solid debut for the $399 iPhone SE, which was launched earlier this year. iPad and iMac sales, meanwhile, rose 22% and 31% respectively as work-from-home shifts powered computer purchases. Services revenues were pegged at $13.2 billion, just shy of Apple's recent record and up 15% from last year.
Apple declined to offer a near-term profit forecast, "given the uncertainty around the world' and the ongoing COVID-19 impact, but noted that it expects to see continued gains for the iPhone, despite likely delays of "a few weeks" for its iPhone 12 launch in September.