RBC raises Apple price target to $120, predicts Apple Watch will earn $10B in first-year revenue
RBC Capital Markets on Monday increased its price target for Apple stock to $120 per share, a number that incorporates the investment firm's expectations for the upcoming Apple Watch, predicted to sell 20 million units in its first 12 months.
With shares of AAPL already close to its previous price target of $115, the new estimate gives RBC some room to spare after the stock's recent gains. Apple stock has been trading at an all-time high, both in terms of share price and market capitalization.
RBC analyst Amit Daryanani said on Monday that his new price target incorporates estimates for the Apple Watch, which he expects will launch around March of 2015. He predicts that Apple could sell 20 million units in the wearable device's first 12 months, with an average selling price of $520, achieving $10 billion in added revenue over the period.
The analyst expects that the Apple Watch will debut late in Apple's March quarter, giving the company only two to four weeks to ship units. But if Apple can sell 2 million units in the launch window, he sees the Apple Watch adding about $1 billion in revenue for the March quarter.
Thus far, Apple has said little about its upcoming Watch, offering a launch window of "early 2015" and a starting price of $349. Daryanani expects that some versions of the Apple Watch -- most notably the fashion-focused 18-karat gold edition -- will sell for over $1,000.
Though he is bullish on the Apple Watch, Daryanani said key questions remain about battery life, gross margin, penetration rate among the iPhone user base, and the value of Apple Pay integration. Still, he predicts that gross margins on the device will be at 50 percent, helping to boost Apple's overall margins.
Daryanani admitted that his estimates for the Apple Watch are "conservative," and he believes investors should share his view, as the device requires tethering to an iPhone 5 or later. His 20 million sales figure factors in an estimated 10 percent penetration rate to existing iPhone sales in fiscal 2015, and the number is also about on par with the number of iPads Apple sold in its first year.
With shares of AAPL already close to its previous price target of $115, the new estimate gives RBC some room to spare after the stock's recent gains. Apple stock has been trading at an all-time high, both in terms of share price and market capitalization.
RBC Capital Markets sees the Apple Watch selling 20 million units in its first 12 months at an average price of $520.
RBC analyst Amit Daryanani said on Monday that his new price target incorporates estimates for the Apple Watch, which he expects will launch around March of 2015. He predicts that Apple could sell 20 million units in the wearable device's first 12 months, with an average selling price of $520, achieving $10 billion in added revenue over the period.
The analyst expects that the Apple Watch will debut late in Apple's March quarter, giving the company only two to four weeks to ship units. But if Apple can sell 2 million units in the launch window, he sees the Apple Watch adding about $1 billion in revenue for the March quarter.
Thus far, Apple has said little about its upcoming Watch, offering a launch window of "early 2015" and a starting price of $349. Daryanani expects that some versions of the Apple Watch -- most notably the fashion-focused 18-karat gold edition -- will sell for over $1,000.
Though he is bullish on the Apple Watch, Daryanani said key questions remain about battery life, gross margin, penetration rate among the iPhone user base, and the value of Apple Pay integration. Still, he predicts that gross margins on the device will be at 50 percent, helping to boost Apple's overall margins.
Daryanani admitted that his estimates for the Apple Watch are "conservative," and he believes investors should share his view, as the device requires tethering to an iPhone 5 or later. His 20 million sales figure factors in an estimated 10 percent penetration rate to existing iPhone sales in fiscal 2015, and the number is also about on par with the number of iPads Apple sold in its first year.
Comments
Yep and if/when Apple doesn't announce sales figures after launch the product will be considered a failure and Apple DOOMED.
No doubt Jony is already working hard on ?Watch2 ... chamfered edges maybe?
I think chamfered edges are already passé, as far as Ive is concerned. As I have said, they look dated on the Air now.
Let the 2015 Apple Watch pump and dump commence
So sell now, buy later?
Haha you're funny, If Apple was expecting unit sales like that in the first year they wouldn't be reporting ?Watch with accessories.
Haha you're funny, If Apple was expecting unit sales like that in the first year they wouldn't be reporting ?Watch with accessories.
Well, right now it is an accessory to the iPhone...
True. But there were some raised eyebrows when Cook said Apple would be reporting ?Watch figures in an "other products" category along with accessories and ?TV. I think there are lots of competitive reasons for that but I also think it's a way for Apple to be more conservative with expectations.
True. But there were some raised eyebrows when Cook said Apple would be reporting ?Watch figures in an "other products" category along with accessories and ?TV. I think there are lots of competitive reasons for that but I also think it's a way for Apple to be more conservative with expectations.
I think within a year they'll break it out into its own category. It may be a way to throw the other companies off guard, so they don't try to compete too hard at first. Of course, Cook won't tell us his reasoning because it'd get out, but there's got to be some reason.
Admittedly, it could just be managing expectations. That was the rumored reason they announced it so early, to 'manage expectations'.
hey so did you sell your APPL since it went over $110? you said that during the GTA business.
Haha you're funny, If Apple was expecting unit sales like that in the first year they wouldn't be reporting ?Watch with accessories.
I don't think that was meant for you... Sog was trolling for the great blue Benjamin Frost with that bait.
I think too many people get too confused over "labels" and "product categories" and then get concerned when various categories apparently start dropping down in sales statistics.
The fact is, Apple is hard at work creating smaller and smaller computers packaged in different form factors—because they can—and so that they can follow shifting markets more flexibly.
The ?Watch will be yet another hit as it proves to be so many things we hadn't realized we needed. It's OK with me that it relies on an iPhone, as I always have mine with me. Perhaps it'll be able to sever such dependency when various battery and GPS technologies develop.
I had an iPad 2 which I liked, but I stopped using it at some point, so I sold it. Then I had an iPad Mini which I liked, but I stopped using it, especially when I got my iPhone 6+. The phone was big enough, was fast, and had 128GB of storage. The iPad Mini was too big, relatively slow, and had only 16GB of storage.
Now the iPad Pro is of some interest, especially if it somehow answers my wild idea of it being able to optionally run desktop apps like the new Adobe apps with touch interfaces which run on the Surface. This should really put a nail in the Surface's coffin.
All the while, the iMac will probably remain quite relevant for years to come. But I'm looking forward to 5K displays for the Pro, and The Foundry Modo supporting its GPUs.
So again, I'm really glad Apple has held its line on producing "the best" products all these years. It's built up its ecosystem continuously since Steve unveiled OS X and said that the company was betting its future on it. It's reinvested a good chunk of its profits in R & D to constantly refine and modify just what "the best" means. And now seems fully capable of skating to where the puck will be, so to speak.
Haha you're funny, If Apple was expecting unit sales like that in the first year they wouldn't be reporting ?Watch with accessories.
Stop changing the facts please READ the article and stick to facts please. Apple is not expecting sales like that. It was RBC making a prediction
IMO Apple should stop reporting iPad/iPhone unit sales seperately. They should just report total iOS devices. All it does is give Wall STreet and Media hacks an excuse to bash iPad.
All i want is:
Total iOS units
Total iOS revenue
I think the CFO is leaning toward that direction and the AppleWatch is the first step. With the iPadMini and 6+ the line between tablet and phone is blurred so there is no reason to seperate the two.
Doing that, if an iPad unit dip caused the overall total to drop, every single analyst would use that as an excuse to claim iPhone sales were slowing down. So I hope they don't combine them.
My guess is that the margins on the various models will vary widely. The Edition will most certainly be priced way above the cost to add some gold to the case. The Sport might be something of a loss leader.
Another thing to watch (!) will be the roll out of the SDK for the WatchOS (or whatever it is named.) iPhone OS (what it was originally called) didn't have anywhere near the capability for the apps as iOS does now. Apple Watch is an iPhone accessory, and probably will be for some time (!) but many people will want to know what they can *do* with it.
The current speculation is that Apple Watch does not have GPS or WiFi capability on board, nor a cell phone chip of any sort. Seems to be BT4.0 connectivity only (and via the charging system.) I think these are most likely due to engineering decisions on battery life. But - at some point in the future, a very restricted GPS/WiFi/Cell chip could be included for the sole purpose of emergency call (911) or theft reporting. Once the hardware has that, theoretically the SDK could allow access by apps "certified" to have battery effects below a threshold. And of course, battery tech should improve over time too.
The future is bright for the product. I'll buy 2 on launch day.
I bet you that Apple sell fewer than 10 million in the first year.
If Apple don't declare any numbers, we can presume that my prediction is correct.