JP Morgan raises Apple price target to $145, forecasts sales of 26M Apple Watches this year

Posted:
in AAPL Investors edited February 2015
Investment firm J.P. Morgan on Wednesday revised its estimates to accommodate for the April launch of the Apple Watch, a product it believes will help push shares of AAPL to $145 before the end of 2015.

Apple Watch Sport


Analyst Rod Hall issued a note to investors Wednesday, a copy of which was provided to AppleInsider, in which he moved his December 2015 price target up $5 to $145. The increase comes alongside J.P. Morgan's first forecast for the Apple Watch, in which its "central case" sees the company selling 26.3 million units in calendar 2015.

Hall's estimates are based on the forecast that there will be 400 million potential Apple Watch customers by the end of the March quarter, just before the launch of the new wearable device. Because it requires an iPhone for use, the Apple Watch is limited to owners of the iPhone 5 and newer.

The sales forecast calls for the Apple Watch to be on the wrists of 5 percent of compatible iPhone owners before the end of the year.

Assuming that the "sport" version of the watch will be by far the most popular model, representing a projected 95 percent of sales, Hall predicts the device will net Apple 39 percent margins.




But if the stainless steel version of the Apple Watch or the gold "Edition" model prove more popular than Hall expects, he admitted his margin projections could prove conservative.

The projected financial impact of the Apple Watch also led Hall to increase is fiscal year 2015 earnings per share forecast by 2.4 percent to $9.21.

Hall predicts that Apple Watch growth will accelerate in 2016, when he sees penetration reaching 13 percent of compatible iPhone users by the end of the year. For fiscal 2016, he has raised his earnings per share forecast by 10.4 percent to $10.50.

J.P. Morgan's increased price target comes a day after shares of Apple closed at an all-time high of $122.02. Apple also finished trading on Tuesday with a record breaking market capitalization of $710.74 billion --?the largest closing value ever for any U.S. company.

Calling Apple "the most attractive large cap" in its coverage, J.P. Morgan has reiterated its "overweight" rating on the iPhone maker.
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Comments

  • Reply 1 of 39
    Guess this means his firm is getting ready to short AAPL.
  • Reply 2 of 39
    blastdoorblastdoor Posts: 2,394member

    The prediction about the mix of Sport and other models is interesting. I strongly suspect he's right to assume that the gold watch represents a small fraction of sales. But the split between stainless steel and aluminum could be very interesting. My guess is that stainless steel makes up closer to 20% of sales. 

  • Reply 3 of 39
    BTW, AAPL at all-time high of $123.93!!!
  • Reply 4 of 39
    MacProMacPro Posts: 19,339member
    blastdoor wrote: »
    The prediction about the mix of Sport and other models is interesting. I strongly suspect he's right to assume that the gold watch represents a small fraction of sales. But the split between stainless steel and aluminum could be very interesting. My guess is that stainless steel makes up closer to 20% of sales. 

    I have a suspicion the stainless steel version will be far higher than that. Just for fun I'm going for a year end tally of >60% are stainless steel, <10% gold and around 30% the low end version, I'm risking a $1 on this bet with a friend :smokey:
  • Reply 5 of 39
    MacProMacPro Posts: 19,339member
    BTW, AAPL at all-time high of $123.93!!!

    No doubt we will see the usual ups and downs but I feel this is the year of the pre split $1000 mark.
  • Reply 6 of 39
    I have a suspicion the stainless steel version will be far higher than that. Just for fun I'm going for a year end tally of >60% are stainless steel, <10% gold and around 30% the low end version, I'm risking a $1 on this bet with a friend :smokey:

    Andy Ihnatko said the stainless version is very solid and heavy, comparable to any high-end luxury watch.
  • Reply 7 of 39
    MacProMacPro Posts: 19,339member
    Glass half empty: " Because it requires an iPhone for use, the Apple Watch is limited to owners of the iPhone 5 and newer."

    I'd point out this can be viewed another way ...

    Glass half full: ?Watch sales drive additional iPhone sales from those that want it and don't yet have an iPhone 5 and newer.
  • Reply 8 of 39
    MacProMacPro Posts: 19,339member
    Andy Ihnatko said the stainless version is very solid and heavy, comparable to any high-end luxury watch.

    So to avoid muscle build up on only one arm you wear on alternative wrists each day ;)

    Wow, there is a name from my past! Mac World Magazine wasn't it?
  • Reply 9 of 39
    Quote:

    Originally Posted by digitalclips View Post





    So to avoid muscle build up on only one arm you wear on alternative wrists each day image



    Wow, there is a name from my past! Mac World Magazine wasn't it?

     

    What sort of an Apple fan are you?!

     

    You buy two watches...

  • Reply 10 of 39
    MacProMacPro Posts: 19,339member
    What sort of an Apple fan are you?!

    You buy two watches...

    DOH! :D
  • Reply 11 of 39
    BTW, AAPL at all-time high of $123.93!!!

    No doubt we will see the usual ups and downs but I feel this is the year of the pre split $1000 mark.

    $143 is easy... I'm still hoping for the Trillion Dollar Company. ($170)

    Will be interesting how the global economy impacts things.
  • Reply 12 of 39

    Two watches may be the key to Apple Watch. Everybody talks about battery life but if the watch does a lot of useful things then it mat be worth a watch for work and a watch for home - solving the short battery life and doubling Apple sales.

  • Reply 13 of 39
    lkrupplkrupp Posts: 9,301member
    Quote:

    Originally Posted by SpamSandwich View Post



    BTW, AAPL at all-time high of $123.93!!!



    But doomed nonetheless.

  • Reply 14 of 39
    Just broke $124.13!
  • Reply 15 of 39
    lkrupplkrupp Posts: 9,301member

    All the techies urinating on the Apple Watch’s grave already. My, my. my. Got any of those feminine napkin jokes left over from the iPad launch? I remember the techies whining about how tablets would never catch on because you can’t do real work, and you couldn’t access the “real” Internet because iOS didn’t support Flash.  I for one trust Apple’s ability to succeed by building great products that people want to use. They didn’t get to that $700 billion market cap by selling crap you know.

  • Reply 16 of 39
    sflocalsflocal Posts: 5,658member
    lkrupp wrote: »
    All the techies urinating on the Apple Watch’s grave already. My, my. my. Got any of those feminine napkin jokes left over from the iPad launch? I remember the techies whining about how tablets would never catch on because you can’t do real work, and you couldn’t access the “real” Internet because iOS didn’t support Flash.  I for one trust Apple’s ability to succeed by building great products that people want to use. They didn’t get to that $700 billion market cap by selling crap you know.

    Any idea what alias Tekstud is using now? I remember him clearly falling into that description.
  • Reply 17 of 39
    If apple announces even one more catergory that is compelling, the real stock fireworks will begin.

    Car technology ... Not sure what the killer app will be. Driverless is too far off to make a dent.

    Tv tech? Perhaps, but unclear if there is much more to milk in that cow.

    Content creation? Not really apple's thing.

    Tech theme park of some kind? Doubt it unless they team up with disney.

    Solar farms? Maybe, but dubious for the bottom line in the near future.

    Some grand plan for all of the above? Some sort of crazy grand vision for the new architecture of the world? All they have to prove to the markets is that their vision is huge and they have a high probability of executing huge.
  • Reply 18 of 39
    Quote:

    Originally Posted by lkrupp View Post

     

     and you couldn’t access the “real” Internet because iOS didn’t support Flash.  I for one trust Apple’s ability to succeed by building great products that people want to use. They didn’t get to that $700 billion market cap by selling crap you know.




    What's flash? <img class=" src="http://forums-files.appleinsider.com/images/smilies//lol.gif" />

     

    Seriously though, I don't have a computer with it installed. Quite nice, those stupid Facebook videos don't autoplay, same with most advertising.

     

    I still love how Apple hasn't officially confirmed that the ?Watch Sport is the $349 model, but everyone's assured it will be the case.

  • Reply 19 of 39
    MacProMacPro Posts: 19,339member
    aaarrrgggh wrote: »
    $143 is easy... I'm still hoping for the Trillion Dollar Company. ($170)

    Will be interesting how the global economy impacts things.

    I would not complain at reaching that :)
  • Reply 20 of 39
    Quote:

    Originally Posted by SpamSandwich View Post





    Andy Ihnatko said the stainless version is very solid and heavy, comparable to any high-end luxury watch.

    I'm really in two minds about how to go about buying. It is a given I will be buying two, and like when I bought iPad, it would be nice to get them delivered to the front door on launch day. But...I'm kind of thinking I'd like to try one on, compare the models and bands...make it an experience. But there is no way I am going anywhere near an Apple Store within 3 months of launch. They will be swamped, and I don't need the chaos.

     

    I would be interested in seeing the actual buying experience for the Apple Watch Edition. There is no way I can afford one - and I'm not sure I'd even like it given how comparatively heavy it will be - but it would be neat to see one and hold one....and be treated like I could afford it. 

     

    Really looking forward to seeing the roll out. Not sure how they will do it. Tim would probably like to say in a media event "on sale today for delivery on xxx" but not sure that is realistic. Probably "taking orders [in a few days]..."

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