BMO Capital Lowers Apple Watch Estimates Following Recent Survey (AAPL)

BMO Capital affirms Apple (Nasdaq: AAPL) at Outperform with a price target of $135 after the firm conducted its survey of interest in the Apple Watch.

Analyst Keith Bachman said approximately 735 responses were taken with the recent survey. The analyst commented, About 9 percent of respondents who own an iPhone plan to buy the Apple Watch. About 1 percent of respondents who don’t own an iPhone plan to buy the Apple Watch. Of the respondents who plan to buy the Watch, approximately 60 percent plan to buy the Apple Sport, which starts at $349. About 12 percent of iPhone owners plan to buy the Apple Watch model.

Bachman offered the following analysis: Based on the results of our survey, we are lowering our estimates for the Apple Watch. Previously, we had assumed that Apple would sell 55.5 million units from the June 2015 quarter through the September 2016 quarter. Given our survey results, we are lowering our Apple Watch estimate to 39 million units over the forecast period, or ~9 percent of our estimated iPhone 5 and iPhone 6 installed base. Consistent with our survey, we assume 70 percent of demand is for the Sport model and 30 percent for the Watch model, which implies a blended ASP of ~$465 vs. our previous assumed ASP of ~$420. We assume demand for the Edition version is too small to matter.

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