Morgan Stanley ups Apple price target to $110, sees sales of up to 60M 'iWatch' units in first year
Strong customer loyalty for Apple's iPhone is predicted by Morgan Stanley to drive a so-called "halo effect" for sales of the company's rumored "iWatch," prompting the investment firm on Monday to increase its price target for AAPL stock to $110.
The new price target from Morgan Stanley, which would represent an all-time high for shares of AAPL if the prediction were to come true, was revealed in a research note to investors, a copy of which was provided to AppleInsider. In the short term, analyst Katy Huberty expects Apple will report results at the high end of Wall Street expectations when it reveals the results of its just-concluded June quarter next Tuesday.
But looking ahead to the fall and beyond, Huberty has particularly high hopes for the anticipated debut of a wrist-worn "iWatch" from Apple. She said current smart watch sales should not be used as a predictor for how a product from Apple might fare, and instead investors should look to how the company has successfully managed to sell new product categories to existing customers.
The so-called "halo effect" was first used to describe how iPod owners were switching from Windows PCs to Apple's Mac platform. But going forward, Huberty believes that the same effect may help drive strong initial sales of the "iWatch."
She sees a range of 30 million to 60 million "iWatch" units being sold in the first 12 months of availability. Her models assume an average selling price of $300 and gross margins between 40 percent and 50 percent.
She noted that historically, investors have underestimated sales of new Apple product categories based on the limited success of established products. For example, investors originally compared the iPod to the Sony Walkman, the iPhone to BlackBerry, and the iPad to netbooks, she said.
She also noted that loyalty to the iPhone brand has been increasing over time, growing from 73 percent in December of 2011 to 90 percent in March of 2014. She believes that kind of loyalty will bring new users to the "iWatch" in the first year.
Morgan Stanley's new price target is up from its previous prediction of $99. The firm also provides investors with a valuation range, which currently ranges from a bull-case high end of $132 per share, to a bear case of $74.
The new price target from Morgan Stanley, which would represent an all-time high for shares of AAPL if the prediction were to come true, was revealed in a research note to investors, a copy of which was provided to AppleInsider. In the short term, analyst Katy Huberty expects Apple will report results at the high end of Wall Street expectations when it reveals the results of its just-concluded June quarter next Tuesday.
But looking ahead to the fall and beyond, Huberty has particularly high hopes for the anticipated debut of a wrist-worn "iWatch" from Apple. She said current smart watch sales should not be used as a predictor for how a product from Apple might fare, and instead investors should look to how the company has successfully managed to sell new product categories to existing customers.
The so-called "halo effect" was first used to describe how iPod owners were switching from Windows PCs to Apple's Mac platform. But going forward, Huberty believes that the same effect may help drive strong initial sales of the "iWatch."
She sees a range of 30 million to 60 million "iWatch" units being sold in the first 12 months of availability. Her models assume an average selling price of $300 and gross margins between 40 percent and 50 percent.
She noted that historically, investors have underestimated sales of new Apple product categories based on the limited success of established products. For example, investors originally compared the iPod to the Sony Walkman, the iPhone to BlackBerry, and the iPad to netbooks, she said.
She also noted that loyalty to the iPhone brand has been increasing over time, growing from 73 percent in December of 2011 to 90 percent in March of 2014. She believes that kind of loyalty will bring new users to the "iWatch" in the first year.
Morgan Stanley's new price target is up from its previous prediction of $99. The firm also provides investors with a valuation range, which currently ranges from a bull-case high end of $132 per share, to a bear case of $74.
Comments
Apple will sell 500,000,000 iTV on the first day.
There. Now tank the stock when I’m wrong.
Oh, and pay me $80,000 a year. These analyses don’t come cheap, you know.
Morgan Stanley's new price target is up from its previous prediction of $99. The firm also provides investors with a valuation range, which currently ranges from a bull-case high end of $132 per share, to a bear case of $74.
+/- 30%???
Well, that target range certainly covers her ass...
http://www.cnet.com/news/samsung-readies-galaxy-alpha-for-war-with-iphone-6-report/
+/- 30%??? Well, that target range certainly covers her ass...
You don’t mean it, but that’s a pretty good insult as to the proportions of her size of her measurements, after all. So I’ll take it. She deserves it.
Apple will sell 500,000,000 iTV on the first day.
There. Now tank the stock when I’m wrong.
Oh, and pay me $80,000 a year. These analyses don’t come cheap, you know.
So do you believe Apple shares should be priced higher, or lower, than they currently are?
Whichever will net me, personally, the most money, either from my handlers for shorting or from selling stock. Higher.
Looks like Wall Street wants to make money off of Apple again. Then when Apple does not meet their imaginary expectations they can downgrade the stock & play this game all over again.
I still cannot believe that there will be a single "iWatch". As I go over all the stuff I've read, I can count at least three possible models: 1) a fitness model, 2) a health monitor (maybe even two, specialized for cardiac problems and for diabetes), and 3) a luxury model (think real Swiss movement with a subtle notification function - maybe not a watch per se but a technology to be licensed).
Plus, even though they got the trademark, I can't believe Apple would actually use the name "iWatch".
Marijuana stocks. ????
1) the iWatch will debut at a price greater than $500 & be a luxury item
2) the analysts and tech pundits will slam Apple for its outrageous pricing
3) we will all want one
4) they will sell like hotcakes
5) the other competitors will give up trying to compete
6) except Samsung who will make a crappy
big screen version
tell me i'm wrong