In a new report, analysts at BMO Capital Markets discussed the results of a survey the firm conducted on Apple Inc. AAPL 0.43%‘s new Apple Watch. The results of the survey impacted BMO’s projections for the watch, but had little impact on their overall outlook for Apple.
The Numbers
Of the 733 survey participants who own an iPhone, about 9 percent indicated that they intend to buy an Apple Watch. About 1 percent of respondents who don’t own an iPhone intend to purchase a watch.
Of the respondents who intend to buy the watch, 60 percent plan to buy the Apple Sport model, which has a starting price of $349. About 12 percent of iPhone owners intend to choose the Apple Watch model.
Impact
Based on the results of the survey, BMO analysts are lowering their overall expectations for the Apple Watch. Analysts had previously called for Apple to sell 55.5 million units from the June 2015 quarter to the September 2016 quarter, but they have now lowered that estimate to 39 million units. This new projection represents 9 percent of the iPhone 5 and iPhone 6 user base and is consistent with the 9 percent buy rate indicated in the survey results.
Analysts are also assuming a 70/30 percent split in demand between the Sport model and the Watch model based on the survey results. This mix implies an overall average sales price of about $465, higher than the previously projected $420.
Outlook
While the survey results certainly impacted analysts’ projections for the watch, the lower sales projections and the higher average sales price counteract each other to a certain extent.
BMO is maintaining both its Outperform rating and $136 price target for Apple.
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