Get Ready for Growth: Here’s How the iWatch May Impact Apple

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Source: Thinkstock

Source: Thinkstock

With two highly anticipated larger screen iPhone models and a wrist-worn wearable tech device expected to be released by Apple (NASDAQ:AAPL) this fall, analysts have plenty of reasons to boost their price targets on the Cupertino-based company’s shares. In a recently issued note to investors obtained by Barron’s, Evercore Partners’ Rob Cihra boosted his price target on Apple shares to $115 from $100, based on the strong sales expected from both product categories. Before the split, Apple’s highest closing price was $702.10, or a little over $100 at the split-adjusted price. Evercore’s new price target would put Apple’s pre-split stock price above $800.

Like many analysts, Cihra believes that there is a “pent-up demand” for a larger screen iPhone that will drive an unusually high number of sales. Based on information provided by supply chain sources, most industry watchers believe that Apple is planning on releasing two larger iPhones with screen sizes of 4.7 inches and 5.5 inches. In his note, Cihra predicted that Apple will sell 58 million iPhones in the December quarter. This would surpass last year’s December quarter iPhone sales of 51 million units and set a new all time quarterly sales record for Apple. As noted by Cihra, this would also put Apple’s smartphone growth at 12 percent year-over-year, significantly higher than rival Samsung’s (SSNLF.PK) expected year-over-year growth rate of 6 percent.

However, in order to justify his relatively high price target on Apple shares, Cihra put a particular emphasis on the expected growth in Apple’s “accessories” category that will include the rumored iWatch. The Evercore analyst predicted that Apple’s accessories’ sales would grow to $11.28 billion in fiscal 2015, a year-over-year increase of 91 percent. It should be noted that most industry watchers believe that the iWatch will be launched in October of 2014, the beginning of Apple’s fiscal 2015.

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