Apple could surge another 27% in a best-case scenario, still has 'a lot of gasoline left in the tank' after reaching a $2 trillion valuation, analyst says

• Daniel Ives of Wedbush thinks that Apple can gain more in the next 12 months even after becoming the first US-listed company to reach a $2 trillion market value.
• "We still believe the stock has a lot of gasoline left in the tank with an iPhone 12 'supercycle' on the near term horizon," Ives wrote in a Friday note.
• He has an "outperform" rating on the stock, a price target of $515 and a bull case of $600 — roughly 27% higher than where Apple closed Thursday.
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Even after Apple this week became the first US-listed company to hit a $2 trillion market value, it could still surge higher in the coming months, according to Daniel Ives of Wedbush.

"With the elusive $2 trillion mark hit this week by Apple, we still believe the stock has a lot of gasoline left in the tank with an iPhone 12 'supercycle' on the near term horizon," Ives wrote in a Friday note. He has an "outperform" rating on the stock, a price target of $515 and a bull case of $600 — roughly 27% higher than where Apple closed Thursday.

According to Ives, even against a soft backdrop due to COVID-19, "Apple has a 'once in a decade' opportunity over the next 12 to 18 months as we estimate roughly 350 million of Cupertino's 950 million iPhones worldwide are in the window of an upgrade opportunity."

In addition, Ives is seeing "considerable strength" from China, which he estimates will account for roughly 20% of iPhone upgrades in the coming year.

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Baked into Ives' bull thesis is Apple's services business, which he values between $700 billion to $750 billion and thinks will generate more than $60 billion annual revenue in 2021. Ives also sees growth in wearables booming, and estimates AirPods unit sales of 90 million in 2020 versus 65 million in 2019.

The upcoming iPhone 12 5G launch is also one of the most significant product cycles for Apple, according to Ives.

"We still believe many on the Street are underestimating the massive pent-up demand around this supercycle for Apple, which remains the opportunity for the bulls heading into 2021 as this monetization engine heads into its next gear," said Ives.

Apple has gained 61% year-to-date through Thursday's close.

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