BMO raises Apple target to $135, predicts 19M Apple Watch & 207M iPhone sales in 2015

Posted:
in AAPL Investors edited February 2015
Investment firm BMO Capital Markets was the latest to increase its Apple price target this week in the face of the stock's huge gains, which are forecast to continue with the success of the iPhone 6 and upcoming launch of the Apple Watch.




Analyst Keith Bachman raised his target by $5 to $135, citing increased confidence that the iPhone installed base will upgrade to the latest iPhone 6 and iPhone 6 Plus. He also sees a large number of iPhone owners becoming early adopters of of the Apple Watch.

Bachman's projections call for Apple to sell 19 million Apple Watch units in calendar year 2015. He believes most of those sales -- 10 million --?will come in the December quarter, as people buy the wearable accessory for the holidays.

His numbers assume that by the end of the year, the Apple Watch will find its way onto the wrists of 4 percent of the 420 million users in the estimated iPhone installed base. Naturally, he suspects that sales will be greater to early adopters who already own the iPhone 6, with 8 to 9 percent of those buying the Apple Watch during the same period.




Looking forward to fiscal year 2016, Bachman believes the Apple Watch could reach as many as 17 percent of the iPhone 6 installed base by the end of next year.

As for the iPhone, Bachman projects calendar year 2015 sales of 207 million units -- a number he admitted is "perhaps conservative."




That's because as of the December 2012 quarter, he estimates that the iPhone installed base was at 220 million users. With those iPhone owners now likely out of contracts and eligible for an upgrade, if just 94 percent of them bought a new iPhone, it would meet his forecast of 207 million units.

"Apple's current iPhone offering, pending the Watch launch and the strength of Apple's family of products, combined with Apple's large and loyal installed base, gives us confidence in our iPhone forecast," he wrote.

BMO's bullish outlook on Apple has led the investment firm to maintain its "outperform" rating on the company's stock.
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Comments

  • Reply 1 of 57
    Analysts...LOL! Is there anything they CAN do?
  • Reply 2 of 57
    MacProMacPro Posts: 19,712member
    Analysts...LOL! Is there anything they CAN do?

    Only barely keep up with AAPL's actual price in their predictions it seems!
  • Reply 3 of 57
    Looking forward to fiscal year 2016, Bachman believes the Apple Watch could reach as many as 17 percent of the iPhone 6 installed base by the end of next year.

    As for the iPhone, Bachman projects calendar year 2015 sales of 207 million units -- a number he admitted is "perhaps conservative."

    I don't think 17% is realistic - at all.
    I think 200+M is a good call - as far as anyone can guesstimate this.
  • Reply 4 of 57
    MacProMacPro Posts: 19,712member
    With ?Watch launch Apple should start offering bundled hardware in this category. Buy an any style ?Watch + iPhone 6 or 6 plus at a special bundle price.
    (Tim if you like this idea send the royalty info to my PM.) :D
  • Reply 5 of 57
    tmaytmay Posts: 6,293member
    Quote:

    Originally Posted by PhilBoogie View Post





    I don't think 17% is realistic - at all.

    I think 200+M is a good call - as far as anyone can guesstimate this.

    I agree with you, though I do think that Apple could sell 20 million in the first year, assuming that lots of the sports watches are sold, and lots of those would have to interface with iPhone 5 and 5s to get to that number.

     

    I have a 5, passing on the 6, but will be looking towards the 6s models for the little refinements that tend to happen with the 's' models.

     

    As for the watch, is suspect that many potential buyers will wait for the second iteration, no matter how good the first is. That would be me; why take a chance?

  • Reply 6 of 57
    slurpyslurpy Posts: 5,382member

    Even if the Apple Watch 1 million, it will be infinitely more successful than any other competing product, and thus a success. We don't need to measure "success" by the insanely high sales volume of iPhone, that not other product will ever match, either from Apple or from someone else. No, the Apple Watch will not be the next iPhone. But that doesn't mean it doesn't deserve to exist. If that was the criteria, then Apple should just eliminate its entire product line. 

     

    That being said, I am very long on the Apple Watch. It is well designed, extremely customizable, does not look offensive, can appeal to a wide demographic, has versatile capabilities, a well thought out input mechanism, and will of course from Apple's brand name and massive marketing campaign. Within 2 years it will be an extremely common site, and as well respected as any other product Apple makes. 

  • Reply 7 of 57

    I find it hard to believe that the new Apple Watch will sell well. My main reason is the lack of broad appeal of a smart watch in general, outside of the tech geek sphere. And especially its lack of fashion appeal for women. This does not look like a piece of fashion jewelry in any sense, as much as Apple would like to advertise. With the face of the watch being solid black most of the time, it has no visual appeal to be shown off as an accessory like most watches are. It would make me quite happy to be proven wrong here (I'm a stockholder), but I just don't see it unfortunately. Apple has a solid track record for proving naysayers wrong, so hopefully this is the case once again, but it's hard to make the case as high as 2% let alone 17% sold in 2015. Just not going to happen. Another drawback is the pace at which tech evolves. A regular watch can be used and shown off as a fashion accessory for years, not so for a tech device such as the Apple watch. Lot of money for something that will be outpaced technically in a year or two.

  • Reply 8 of 57
    Quote:

    Originally Posted by Slurpy View Post

     

    Even if the Apple Watch 1 million, it will be infinitely more successful than any other competing product, and thus a success. We don't need to measure "success" by the insanely high sales volume of iPhone, that not other product will ever match, either from Apple or from someone else. No, the Apple Watch will not be the next iPhone. But that doesn't mean it doesn't deserve to exist. If that was the criteria, then Apple should just eliminate its entire product line. 


     

    From an investment standpoint, 1 million would never ever cut it.

     

    If it had been introduced like Apple TV, as a hobby, then, fine, but otherwise... no.

  • Reply 9 of 57
    Quote:

    Originally Posted by battlescarred1 View Post

     

    I find it hard to believe that the new Apple Watch will sell well. My main reason is the lack of broad appeal of a smart watch in general, outside of the tech geek sphere. And especially its lack of fashion appeal for women. This does not look like a piece of fashion jewelry in any sense, as much as Apple would like to advertise. With the face of the watch being solid black most of the time, it has no visual appeal to be shown off as an accessory like most watches are. It would make me quite happy to be proven wrong here (I'm a stockholder), but I just don't see it unfortunately. Apple has a solid track record for proving naysayers wrong, so hopefully this is the case once again, but it's hard to make the case as high as 2% let alone 17% sold in 2015. Just not going to happen. Another drawback is the pace at which tech evolves. A regular watch can be used and shown off as a fashion accessory for years, not so for a tech device such as the Apple watch. Lot of money for something that will be outpaced technically in a year or two.


     

    I tend to agree with most of what you have said... but the idea of it being outpaced within a year or two must be something that Apple has explored extensively. I'm waiting to see if there will be a way to update the chip or something like that.

  • Reply 10 of 57
    If this were any other company making these kinds of profits, the price of its stock would be in Berkshire-Hathaway territory. The real "Apple Tax" is the perennial discount the market applies to Apple. I used to attribute this to the large number of haters (Windows-using corporate types), but with everyone with money having an iPhone in their pocket, where is this prejudice coming from now? I don't get it. Thoughts?
  • Reply 11 of 57

  • Reply 12 of 57
    Quote:

    Originally Posted by sog35 View Post

     

     

    Watch is the first step to replace the iPhone.  Just like the iPod was the first step to replace the laptop/PC for individuals.

     

    In 5-10 years wearables will replace phones for a large chunk of the population.

     

    I think one big market is for elderly.  Imagine a watch that tracks your heartbeat/vitals and can tell if you got a heart attach or fell down?  It could automatically alert the police or family.  In a few years the watch will be a stand alone product.


    I think replace is not the right word.   'extend' is the right one.

    The key gap.  Long Haul antennas.   I strongly doubt you'll get a 3-5 mile range for LTE communications with a devices that will need to get smaller (thickness) and lighter.  At least not in 10 years.

     

    The phone will supplant the laptop as the truly portable personal computer (your computer is always with you).  I would argue that the phone will 'shrink' back (retro;-) to a 3.5" fully waterproof footprint, as we get airplay display tethering to an iPad, before the watch replaces it as the central standalone compute platform.

  • Reply 13 of 57



    I was going to add this in my original post. In looking closely at the back of the Apple watch photos, a thought occurred to me that maybe they had built it in such a way that that round portion of the watch can be taken off in order to update the tech inside. But who knows at this point. Would make sense in order to ease the buying decision for first time owners if they knew that an upgrade path was built into version 1.

     

    As for Sog35's comment, I agree that long term, this wearable technology has the potential to be as big (if not replace) a smart phone. But initially, I think sales will be below expectations until one of the main issues is finally resolved...battery life. 

  • Reply 14 of 57
    rogifanrogifan Posts: 10,669member
    If this were any other company making these kinds of profits, the price of its stock would be in Berkshire-Hathaway territory. The real "Apple Tax" is the perennial discount the market applies to Apple. I used to attribute this to the large number of haters (Windows-using corporate types), but with everyone with money having an iPhone in their pocket, where is this prejudice coming from now? I don't get it. Thoughts?

    Because Wall Street clowns still think of Apple as purely a hardware company that is doomed to disruption from other companies like Xiaomi selling good enough hardware at a cheaper price. Even decent market analysts like Benedict Evans still think Apple will have to sell a cheaper iPhone in developing markets at some point.
  • Reply 15 of 57
    Makes sense. Another reason why I despair over the future of a country so firmly in the grip of a class of people who make money not by adding real value, but just gaming the system. If we had any balls we would take to the streets to demand an end to this kind of freeloading. Welfare fraud is penny ante compared to this legal thievery.
  • Reply 16 of 57
    rogifan wrote: »
    Because Wall Street clowns still think of Apple as purely a hardware company that is doomed to disruption from other companies like Xiaomi selling good enough hardware at a cheaper price. Even decent market analysts like Benedict Evans still think Apple will have to sell a cheaper iPhone in developing markets at some point.

    As mass customization manufacturing continues to evolve and improve, costs will continue to fall, however Apple's margins will continue at about the same level. If Apple could make a $9.99 phone and maintain their margins and high quality, they'd do it.
  • Reply 17 of 57
    It would be nice if apple had some real competition to force it to reduce margins and be forced to sell product at lower prices. The net profits are insane. Always have been. Lol.
  • Reply 18 of 57
    Quote:

    Originally Posted by sog35 View Post

     

     

    same thing could be said for $100k cars.

     

    point is rich people will not be afraid to buy a new Watch every 2 years.

     

    People need to look at the big picture.  Look 20 years in the future.  The phone will no longer be the personal computing devices.  It will be a wearable.  The Watch is the first step to this.  


    Except just "rich" people buying new ones every 2 years isn't going to create the kind of continuous revenue stream they want. The iphone is 70% of their revenue because of the subsidized pricing. I can get a new one every 2 years, sell the old one unlocked and come out even in worst case. iPad sales are sinking because people don't want to pay $600 every two years for something they can't make back the money on. 

     

    You're right about the watch being the first step though. I think eventually it will transition into being a subsidized product once they can put a cell chip inside that the carriers can sell. If you think their profit margins are high on the iphone just wait until you see what it will cost to make a $600 iwatch in 5 years or so. Hint: less than an iphone. 

  • Reply 19 of 57
    satchmosatchmo Posts: 2,699member
    Quote:

    Originally Posted by sog35 View Post

     

     

    Watch is the first step to replace the iPhone.  Just like the iPod was the first step to replace the laptop/PC for individuals.

     

    In 5-10 years wearables will replace phones for a large chunk of the population.

     

    I think one big market is for elderly.  Imagine a watch that tracks your heartbeat/vitals and can tell if you got a heart attach or fell down?  It could automatically alert the police or family.  In a few years the watch will be a stand alone product.


    I respectfully disagree. A watch or other wearable should just do what it does best. Tell time, quick notification, or as you say track one's vital health signs. 

    An iPhone will always be better than a watch for viewing a webpage. A tablet is better than a watch for reading a book.

    Allow each product's form factor to shine and determine the appropriate application.

    This is why I've never quite bought into the AppleWatch's user interface. 

    Zooming in and out seems like trying too hard to shoehorn too much into a limited space.

  • Reply 20 of 57
    Quote:

    Originally Posted by PhilBoogie View Post





    I don't think 17% is realistic - at all.

     

     

    I agree with you that they will likely sell way more than that. Upwards of double that.

     

    Quote:

    Originally Posted by tmay View Post

     

    As for the watch, is suspect that many potential buyers will wait for the second iteration, no matter how good the first is. That would be me; why take a chance?


     

    Some will wait. For many, and entry price of $350 is not that much money.

     

    The comments in the article about the holiday season increase are probably accurate. I can see this being a popular gift. You do sort of need to know your recipient has an iPhone though. I wonder if Apple will offer custom engraving on the Apple Watch? 

     

    I wonder how Apple Watch could be packaged to make the pricing more attractive. I have iPhone 5s and I think I paid $200 for it on contract. Meaning I promised to pay much more for that device over 2 years. If there is some model for the Apple Watch to do this, I can see many more people attracted to it, particularly the higher end more expensive models.

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