Morgan Stanley analyst Katy Huberty like the Apple Inc. (NASDAQ:AAPL) iWatch, even though the product hasn’t been revealed. The analyst boosted her price target on the company on the back of expectations of a very positive second quarter and hopes for the success of the iWatch. On today’s market shares in the Cupertino company rose strongly and sat at $96.77 at time of writing.
The analyst, in a new report on the speculative wearable technology, says that the company could sell more than 30 million units in the first twelve months. The analyst reckons the device could end up costing around $300 and could benefit from a large “halo effect” drawing in the owners of iPhones and iPads. If Apple Inc. (NASDAQ:AAPL) manages anything like the success of either of those products with the iWatch shareholders are sure to be happy.
Halo effect to drive iWatch sales to 30 million
The “halo effect” that Huberty expects to drive iWatch sales describes both brand and software synergy between different pieces of Apple Inc. (NASDAQ:AAPL) hardware. These synergies make it preferable to own another Apple product, even if it is more expensive, or has some other disadvantage when compared to a competing device. The “halo effect” has driven sales of MacBooks even as the world market for notebooks slows, and was probably responsible for the quick takeoff of the iPad.
The base case, according to Huberty, is that the iWatch sales trajectory follows the same path as the original iPhone. Though it wasn’t an obscenely large seller in its first year on the market, the first iPhone did manage to take a significant slice of an established market from competitors. She believes that analysts tend to underestimate sales of Apple Inc. (NASDAQ:AAPL) products by measuring the success of other companies in the same space.
Huberty is measuring the potential success of the iWatch by measuring it against the success, in terms of market penetration, of previous Apple Inc. (NASDAQ:AAPL) gadgets. Judging by those numbers, the company could sell 30 million units of an iWatch in the first twelve months, or 60 million according to the Morgan Stanley bull case.
iWatch reveal remains a mystery
The weight of rumors surrounding an Apple Inc. (NASDAQ:AAPL) wearable computer has grown to such a level that analysts seem to think its release is inevitable. Those rumors have been around for a long time, however, and Apple has not given anything away. The most recent rumors suggest that the device is just about to enter into mass production, readying it for release in time for the holidays.
Though the release date remains a mystery, excitement about a new Apple Inc. (NASDAQ:AAPL) product is driving interest in the market, and the company’s shares. At a price of $300 per unit, sales like Huberty predicts would increase Apple revenue by around $9 billion.
Huberty reckons that Apple Inc. (NASDAQ:AAPL) is looking strong as it heads toward the release of its second quarter earnings numbers. She put a price target of $110 on the company’s stock, up from the $99 she put on the shares in her previous report. Apple stock
