Apple's (AAPL) 'iWatch' Could Add Up to $4/Share Annually - Analyst

February 12, 2013 7:59 AM EST
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Though it seems like a small and insignificant device, one firm thinks big things could come from a potential watch from Apple (Nasdaq: AAPL).

Chatter was aflutter on Monday that Apple might be working on a wristwatch, tentatively dubbed the 'iWatch'. The device is like to pair up with the iTunes ecosystem, as well as the iOS, allowing for greater connectivity to Apple users.

Morgan Stanley's Katy Huberty is out with a few comments and estimates on the potential for iWatch sales. Notably, Huberty discloses that she has no specific knowledge of the iWatch or its potential features, but is modeling based on market analysis.

Huberty sees the iWatch adding about $10 billion to $15 billion in incremental revenue, leading to $2.50 to $4 of additional EPS annually.

In terms of pricing, Huberty sees the device going for somewhere around $200 to $300. This is based on similar products selling for around $140, but having more limited function when compared with iOS.

The analyst also said that market potential for an Apple TV set is about $17 billion in the U.S., adding about $4.50 to EPS.

Huberty sees Apple stock as a free option given upcoming product refreshes, increased distribution, and new segments that Apple might create.

Morgan Stanley rates Apple at Overweight with a price target of $630. Shares are indicated higher in early trading Tuesday.

For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.

Shares of Apple closed at $479.93 yesterday.

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